Integration Focused M&A: Why Execution Should Inform Strategy Before You Sign Part 2 with Ciprian Stan

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At M and A Science. Welcome back to the M and A Science Podcast. This is part two of my conversation with Chipper and Stan, integration leader at Salsinger Group and a guy who's lived through the realities of integration. Not the PowerPoint version. If you haven't listened to part one, go start there. In this episode we're getting into the make or break topics how to assess cultural fitness early, what Chip considers non negotiable before signing the most common integration pitfalls buyers walk straight into and how trust and relationships can decide outcomes just as much as the diligence checklist. All right, let's jump back in with Chiprian.

You're very little about that server in.

The kitchen yes, yes.

Just never seen a server in the kitchen.

I have, I have and I've tried to make a joke about it to bring it up because obviously if somebody has a server in the kitchen and they bring you over, they don't think it's a big enough red flag for them. And you'd like to raise that and say, ah, so everybody can just plug into this and pull information right out of your server if they need it is like the fast. If the WI fi is down, right. And they realize that is this still joking or serious? You switch to due diligence mode now. There will be a lot of surprises in the early stages and that's the time you want surprises. Due diligence the moment you delay surprises. If they go over signing and closing, that's the worst time for surprises. Regardless what kind of surprise you have later, they're bad. You can get good ones. Like, we once had a supplier that had not been renegotiated for three years and we just scrapped half of the cost with that supplier right away because they had not. Nobody thought about them. They said, it's our supplier, it's a house supplier. We've had it three years. We never thought about looking at the price on the market for this commodity. It went down 50%. Say, oh, we just bring them to reality. We don't need to negotiate 50% off. But you're not going to have lots of good surprises later on. And even those are not going to be. You don't want surprises. Either way, they're going to mess up with your plan. And some companies will tell you, I understand you're bringing more money in, but this means you haven't done your homework. Put this in the business case. This should have been a synergy and it's not. Why not? You can be certain of one thing, that you will have surprises. So the fewer and the least impactful they're going to be, then the better for your outcome.

When you say right off the deal they just wind down operations like there was no chance to go try to sell it back out in the market.

The amount of money that was invested in trying to patch things and make them profitable, you'll see a lot of business executives, they're going to say, I don't want to waste any more time with this. This is going to be costing me time. It's going to cost my senior people time from now on. And that usually happens when somebody new steps in to take the reins from somebody else before they, they can write off things without feeling guilty. And they're not going to have the reputational damage because as I said, human behavior that dictates a lot of our decisions and we need to be mindful about it.

Anything else? Non negotiables. When it comes to culture, I would.

Say red team have somebody who headed that you want to brainstorm with. It does not necessarily need to be a decision maker, but somebody that you trust to test your hypothesis and play them back to you and put them in pragmatic words, because those people are rare and if you have them, you should keep them close to you because they're going to make your results better and they're going to limit your losses. Yeah, there's plenty of non negotiables, as I said, that you find out about later on. You don't want to risk early stages, but you always think, I should have invested more time here, I should have asked more questions in that area. The way that you customize your due diligence and I think you're doing a great thing with the five question checklist buildup, is customize your due diligence to fit the opportunity. I did upset somebody by sending them my standard integration plan, which was at the end of a couple of months of asking them. I have this standard integration plan and it's huge because it covers everything. And I'd like you to narrow it down to what makes sense to your deal. We couldn't come to that. And I said, look, we're just going to have to go ahead with using the standard one and we're going to narrow it down or remove everything that's irrelevant later on. And when they finally made time to look at it, it was thousands of actions. And they said, you expect me to fill in? And they did the math. This many tens of thousands of Excel boxes. And I said, no, I would have expected you to look at it and say this 80% of your plan is irrelevant for us. And that's what I want you to do. I want to bring it down, narrow it down to whatever you think is fit. And this can be done both ways, top down or bottom up. Either I give you the full plan and you delete from it, which is preferred by some people because that's the way that they realize. I never thought about that. I would have not added this, but I see it in your standard plan, so let's keep it. And then there's other people who say, I don't want to overcomplicate things. I'm going to build 10, 15 actions and I'm going to start from that, because I'm pretty sure it's going to be more down the road. I think the integration people need to be wiser, and I definitely was wiser after that. In interaction, you cannot throw thousands of thousands of Excel boxes at people and saying, fill this up for me and I'll build up the integration plan as a result of it. You need to ask smart questions. Transaction people don't have your perspective in integration. Ask them the right questions so you can build up the right integration plan for them. And say, based on what you've shared with me, this is what I think integration should look like for this target. Let's debate this, let's test it and see how it holds.

So truly, your integration plan should be based on your diligence because you've emphasized parts of diligence that are important to the deal and the drivers of the deal. So your integration plan should almost reflect that as well. Hey, here's the key things that we must preserve in terms of value and do well and the integration plan will reflect that. How do you balance? Because this is a big part, like buyer led M and A. We talked a lot about the strategy and being deliberate about doing the right deals. But then when it comes to setting up this integration, there's this kind of view. We talked about the different schools in the beginning, but then when you rubber meets the road, you're going through confirmatory diligence. You should be iteratively updating your integration plan in parallel to your diligence. How do you sort of get the bespoke approach of updating the integration plan based on your diligence? But then also you're trying to be programmatic about it. You're trying to say, hey, we have this program that keeps evolving and we're getting better and better about doing integration, which ideally you want to have some standardization, which is why we end up with a thousand item checklist. How do you strike that right balance between being really bespoke to the deal but not starting from complete scratch every time? There's got to be some basis of learnings that you're going to make sure you continuously improve on.

A lot of this, I've done it a couple of times, but it's immensely time consuming when you fine tune based on a wealth of knowledge and information that it's out there in this industry for us to use and the specifics of the deal. Unless you have a small army of people willing to contribute and they're going to be bored pretty quickly after first deal, second One they're going to delegate. Technology is going to help a lot. And I've seen a really good similar tool for interviewing. It was called performance based interviewing, I think in which there was like a small set of questions at the beginning. Is this person exposed to engineering? Do they have this kind of skills there? And then the tool produce the interview sheet for you. And the same way we should be able to do. And I've been trying to do this, it's not automated yet, but it's getting there. Ask the right questions about the target, ask the right questions about the strategy of the deal. Why are we buying this, what's our presence in that region, how much money are we spending on the deal itself, what's the integration budget and so on. And based on that, we should be able to put out a solid enough initial plan. One of my non negotiables coming to that is you have to have, and we did mention this earlier, a preliminary integration plan before signing. This is going to be part of the business case. I brought this template into the business case template. I said you need to have preliminary integration plan as part of the business case. So we know that once this deal is approved, this is our set of milestones for each of the work streams. First three months, I want everybody on the new colors, the new emails, the new financial reporting and everything else. 3rd month I want advertisement out. I want billboards and I want the change of the office and so on. And that will be customized as well. Some of it will be scrapped because things change. Some of it will be developed into standalone side projects. But you have to have a basis to start from. So the worst thing is not having that and starting to build it up on day one. Have the backbone of your integration plan early on and from that is much easier to steer and to build up or build down.

So two big things. The red team find the holes in the plan and really be proactive about it. Then ultimately having a tailored approach, that's how you're going to get these things together. Non negotiables, you covered more than culture. That's like everything. Integration.

Yeah.

Again, I'm the deal guy, right? Getting deals actionable. Most important thing, big thing I learned about that is building trust. And you do that early in the deal process with the main principal. But what you described through this interview so far, there's this continuing element of trust that you need to drive where it actually matters more because you're driving changes, you're working with people again that didn't choose to work for Your organization. I feel like trust is becoming more critical. It's one thing to get somebody, say yes to go do the deal, but then actually driving all these changes. How do you think through and have an approach to do that?

Trust is absolutely critical. You will see deals getting done between people that don't see eye to eye because of financial pragmatic reasons or strategic corporate reasons. Not ideal outcome, not the type of deal you enjoy being part of. In the end, a lot of corrosive interactions and that's where some pragmatic argument drives the deal forward. Before you have the time to establish a relationship, these sometimes need to get done. You have to find a way around it and get the deal done. If the arguments are for it. The ideal way is you get the trust of your counterparts by meeting them eye to eye in their own environment. You have to understand what they're dealing with every day. You need to show them how you're dealing with the same problems on your side. You should not advertise that I'm going to solve all your problems. You should not oversell unless you have a plan to overachieve a realistic one. Most of the times these people are going to be more pragmatic than the average business maker. Because most of the deals I've been part with have been targeting companies in the single double digit millions that have been established and grown from inception by the same person bootstrapped to the hilt. And you know more about this than most people because you've gone through it and they will be very pragmatic about how they build it, how they secured stability, revenue and profitability and what are they willing to sell for. Trust is something that you need to make sure you can both inspire and attract. Trust is not a one way road. You're going to have a level of pragmatism in the seller as well as in the buyer and a friend of mine who sold their business and we were sparring for ideas. I was trying to tell him how things look from my side and he was trying to tell me how things look from his side. And he said because I used the wording, no, but this guy told us this much and this is the foundation of our planning or belief. And he said why do you take that 100%? Because the seller, for no ill purposes, the seller are going to tell you what they think is going to close the deal. It's not something they're trying to lure you in, but they want to close the deal as well. And without realizing it's also a human behavioral Thing they're going to tell you. What do you want to hear? You need to be prepared and try to understand their perspective from different angles and test that. Play back to them what you think you heard and that's how trust will be built. I've witnessed senior people admitting into, oh, I've been completely misguided. I thought this was a different. But now I understand it much better. So let's reorganize. Let's look at this from a different perspective. I did not know that this was so important to you or this element that I've been disregarding, which would have been not allowing a certain department like you said, engineering department be taken over by another department. One eliminator request we had. We don't want our programmers to change their machines. They're all Mac Pro users. They don't want to be brought into whatever your industry standard is. They're going to be still programming on their machines. You can secure them, you can put them into your management program and then. We never thought about that. Okay, so then we need to build in to allow for this to happen into our environment. We did not have a policy for managing their machines into our infrastructure without considering those differences. You're not going to be able to show that you're listening and establishing that trust. I'm going to listen to your requests, I'm going to take them in and I'm going to address them and I'm going to tell you how I'm going to do it. But the one thing that I found as well that was a trust endangerment was promising something in the early stages and that not showing the right actions afterwards. And one thing that I came across that was very painful was in burnout setups setting targets for the seller. We're going to buy your business for this amount of money upfront. We're going to pay you this amount of money two years down the line and then during this time you're going to achieve these numbers. For us, this setup requires a lot of management, a lot of long term management and, and attention and focus. And then six months or one year later we buy another company that overlaps with the initial earn out plan because it eats out of the same geography or cannibalizes the same client or something that overlaps with initial promise. And the previous seller says, but I thought you want me to grow the business in this area and you buy another company that occupies the same geography as my previous talked about this before.

I remember because now all of a sudden it makes that burnout like harder for that person to achieve.

Exactly.

And it's like a big shift like role has been pulled underneath you and.

It'S a, it's a trust damaging act unless you plan it. There's plenty of ways to do this. You can say our M and A program is so active that we may end up doing this at some point in time and we're going to sit down and review your targets or whatever is possible. Maybe we can even overachieve. But you need to be realistic and clear about it because if they find out or if this happens to them without any kind of pre conversation, pre warning, that's not going to be a trust building act. We have this challenge and serial acquirers have this challenge every time. They have a very active M and A program and that this is something you need to plan and think about and allow for in your strategic layouts and that's something that can damage your trust.

Okay, we both agree trust is really important. Careful where I'm threading here. Getting harder and harder with the more.

Interviews I do and actually trying to do deals on the side.

Working on a deal where you keep.

Finding lies, you keep finding things that.

Let'S not call them lies. It's information that people put out there which they wish were true.

They're lies.

As a founder, you may embellish, I may tell you, hey, I feel like I was rounding up my numbers like 7 million turned to 10 and now we're like 9.9. Which I'm like, oh great. Like we're really 10. And you learn that, you learn that actually the more accurate you are, the better. That trust part, you sort of build that. So I keep finding lies on this.

Deal and it's small eyes and then.

Sometimes it's like material like the numbers, it's, oh, we're doing X amount of revenue. No, you're like 30% below that. My concern is I'm already seeing this. That's one of these things where I'll come to terms and either it's a walkaway thing or just the price is going to make sense. This is a deal that we're uniquely positioned to buy ideal buyer and we just get a price that makes sense. We should just do this. This is a no brainer. Maybe it's part of my Indian DNA roots here. We're always in for a good deal.

And we all of a sudden, we'll fix that, we'll fix that. And it just. Which is a whole other conversation why that's another issue.

But I'm Wondering, like, when I get this deal done, slash, if this is.

Only going to unwind into these kind.

Of big cultural operational differences with already what's happening in the front of the deal. But then it's just too hard to walk away from a deal when it's just, hey, financially, this is. We're getting for a price that even if there's some bugs in it, it's going to be worth it. I know you're probably going to tell me not to do this deal, but given that case, and again, I am the deal guy and I'm going to get that deal done. I'm going to pass it to you.

And say, chiprin, it's on you now to go integrate this.

It's very difficult to make hard judgments early on to say, this is the criteria percentage that you need to meet for this deal to go forward. You cannot weigh or measure some of those risks and opportunities. If you do have issues in both the operational outlook and the cultural one, which is the lying part, you should not do this deal. I know if it's one of them, and again, depends on the implications and the impact. What I would think could be a way to still proceed is to bake in your business case. The worst probable scenario, do the math again, see if it still pans out. You're going to invest in case of those risks and happen, if it's still net positive for you, then you should go ahead. But be realistic about the investment or the loss or both, in case those risks are going to hit you later on.

So if we go to the store, there's a beautiful cashmere sweater. The only problem is one size too big, but it's 75% off.

So that's a deal I can't pass up. I'm just like, this is this beautiful cashmere sweater. I'm getting a good deal.

I'm more familiar with the problem where something doesn't fit me and I say, I will work out myself. I'm going to gym myself into this. I'm going to dive myself into this. And it never works.

I know you're absorbing a big risk because that cashmere cider is not going.

To be as nice and soft and fluffy once you put it through the dryer at full temperature.

True. And by the time I go to the gym enough that I'm going to fit into this, it's not going to be in fashion anymore. Everybody's going, my son's going to laugh at me. You're wearing stuff he shouldn't.

It's going to be all fuzzy, afraid. Okay, maybe I need to find like.

A, we should start like a deal.

Therapist, you know, session.

But there are people, and I'm sure you're part of those groups of people that have a sense of the deals that need to be done and deals you need to walk away from. I'm not there. I still can't.

Every single person I brought this particular situation up to has told me to walk away. Except for other Indians that I talk to.

What makes people successful? It's. Are they willing to take in risk? And there's no real successful person out there that has not taken enough risk to spread around.

I hope this diversity inclusion police isn't.

Listening to this because I didn't say any, I didn't put people in any cat. I'm just putting them into risk adverse, but still risk behavior inviting.

That's a problem. Culturally I'm a risk junkie and.

Okay, fair enough. I feel like this goes back to that range. Here's a wide enough range where it's like you probably shouldn't do the deal, but then you get to that point where there's usually some kind of gap. But it sounds like from the theme of this conversation you want to get to that positive working relationship where it's collaborative and you really are both working towards it can have at least unity around the outcomes you're trying to produce.

Yeah, and we spoke about, I think, keeping the founder in or not, because that's a big differentiator. If you're going to have the founder, the seller, part of your organization for long enough, they can definitely, in many cases they change, be the catalyst of positive behaviors you want to see around the new group. At the same time, too long depends what too long means and also depends on the purposes of your business. I've seen founders stay longer in the acquired business than they've spent in their own business. And I've seen people move away pretty quickly. And there's a risk eliminating behavior where I say let's not keep the founder too long because then we stop cultural growth or development or moving away from the history. But there is a case for both sides and there will be a recommended one in both directions depending on what you're trying to achieve.

That's a great point. On a very positive outlook is that there's more growth and success opportunities that can actually happen. Close, close, friendly. Can we talk about the future of this industry? And there's two parts to it. There's all this emerging AI technology, since were both sort of techie oriented people. There's also just the working model. We talked a bit about this previously about sort of like independent contractors emerging. I know you have some experience, you've dabbled into it. I'm going to go meet a friend, omar, who runs fintalent.com after this we're going to go ski in St Anton. So we'll be probably talking more of how that ecosystem shaping. I personally have found that to be lacking in this industry and have interest around that human capital side because especially if you're an infrequent inquirer, it just helps tremendously to get somebody experienced who's seen it with the outcomes of these deals like in some of these lessons that we talked about getting access to it. But it just like that hasn't been prevalent in this industry. There's obviously big name consulting firms that charge you big name fees and it's tough to justify when you're doing small single digit revenue deal. And then we've seen other industries, there's almost every segment sales, marketing, tech. We use upwork a lot for a lot of these tech projects and hires and a huge ecosystem of these independent contractors. But we really haven't seen that as much in M and A. I want to get your take on that and then also the tech part.

So technology is always going to play a bigger and bigger role and we can debate how big of a bubble AI is. In any emerging technology there's a bubble element built in.

Is there a difference between saying bubble and hype cycle has I've been referring it to as a hype cycle.

I want to call it something that's not derogatory because it shouldn't be in any emerging technology that we ever had. Everybody there was a lot of critics that came and says industrialized factories that'll never work, diesel engines never work, electric engines that will never work AI. It's all of that, it's all a bubble. There's definitely a hype cycle support behind it, which is normal. And by the time we dehydrate and crystallize AI, we're still going to have a lot left. So I'm not concerned that it's a bubble. Will there be a correction? Likely.

This is a deja vu. I remember crowdfunding and then blockchain where I've just. In this past year I've seen 50 plus AI for X and M and A pop up. And then again like all those other cycles, you end up seeing a bunch of them get washed out because it's just there's no room in the market for that much.

Everybody is on the wave. There's so, so many that are caught up with the AI Boom, let's call it. Then there's going to be a lot left when things settle down. There's going to be really good tools out there that we can use, really use. So the thing with the moment in time that we find ourselves in, as my son reminds me that I spent more than my shelf life in dealing with some technologies because he's much more accustomed to them. And when we try to compete on the same terms, he obviously beats my arcane knowledge on things. But besides the fact that the generation that is going to be taking this forward is not going to find it awkward at all, like, we do still feel uneasy around some terms. And I'll give you a relatable example from the cell phone technology era, where I first saw somebody talking on the mobile phone, on the road, just walking on their own. And I found it like this guy is talking to himself and laughing. And at the time it looked like sci fi movies and it could not be more natural. Now it's the same thing with anything that we invent. Changes the way that we behave around technology. The tools and technology and AI will have a huge impact in the way that we go through information. Like you're putting out the tool to parse and browse to hundreds of hours of podcast and pull out the information that you need that's incredibly useful. And the fact it works with video content and audio content, it's incredible to me. The kids today, when they get to be professionals, they won't find it awkward or impressive, they'll just find it normal and natural. But for me, I smile when I type in things and five answers come in from different episodes, different sources, with links to say, this is where you find the reference to what you're looking for. And I thought, wow, if I had this in my university days, I think technology is going to grow into more of a helping tool. We just need to settle down on the hype of inventing everything and just settle for inventing the right things. I don't think you can do this without trying lots of stuff to see what's fit, what's not. And some of them are going to be out of the context, popping up as winners. And those will be the old adage about the last 10 financial crises. Out of the 10 financial crisis, the financial experts have accurately guessed 248. We can debate about what's going to be the future of AI and technology in M and A. I was debating this with a good friend Keith Posner about what's going to be true in leadership ten years from now. And we settled in for the fact that whatever we say now we cannot be wrong because all things are possible. That was our way of not being irrelevant. You need to predict based on what you know. That's a very important skill to have. You need to have pragmatic voice around you. So what are we going to use from the technology that we have today? What should technology look like to help us in the future? Those two discussions need to be had almost.

This is my little vent point to set the record straight because I've been about two years out of CEO role at Deal Room, spent 12 plus years as a technology building solutions for buy side M and A. Felt very proud and happy about where I left the business at record quarter number one market in this segment. It's off to a management team that's scaling it. And that's not my skillset going from 10 million to 50 million. I've never done it before. That was the largest company I've ever worked for. And the management team is incredible. They are good. The CEO over there, Greg comes from the back. That guy is literally trained on every management leadership framework out there. Eats leadership Cheerios every morning for breakfast and he just thrives on all this stuff. I get excited just seeing him in action. I just love being observing, still involved as executive director do a lot with the investor relations side of it. I'm really optimistic about it. I like where the business is also set as a platform. It's just been mature in the market. That's one thing I noticed. A lot of these startups underestimate, especially finance. Slow moving industry people are pretty conservative. They want brands they know and trust and then it's just slow, just really slow to get changes happening. That's one I've noticed where I feel like that alone kind of makes it a challenging environment. Personally, now that I'm out of the business and just looking at the broader ecosystem, I have a question like what IP actually is? Because if everybody's developing on the same large language models, what is actually your ip? And even the stuff that we worked on in Deal Room, it's interesting because you're fine tuning with these prompts to get different kind of outputs and tailoring it for the industry which, okay, you've got a few prompts like you can't have all your IP just based on that. And it's also honestly I've had this debate with other founders and it's the interface and workflow is actually your ip, which I thought's really interesting, not very defendable.

It's pretty easy to copy. People see the chat box and they're familiar with it.

Now every element's got a chat box into it. Been the question and what you brought up with, hey, you're kind of seeing our new product where you have the M and A science membership and part of it's this intelligence hub that we're building. License. That was my going out. People ask me what are you going to do? I was like, well at first I thought I was going to do services, but then I talked to a few operator services companies and I'm like wait, this is just the part I hate.

About running a company. That's all it is is just the.

And the philosophy is there's all these great tools, why don't we just license. And to me, I looked at the IP of all this content, I'm like, we're in unique in that we get pretty tactical. I've been asking a lot of tough questions this interview. This is actually the IP that we have is all this qualitative unstructured content. But then to license one of these AI forward LMS platforms now it's kind of what we're building around. That's been the thing I've been really thinking about a lot lately is what actually is ip. And to me it's almost like marrying what that actually is with. And people might look at like private company data, like another set of ip. Even though that industry is getting weird too. If you talk to any vendor, they all license each other's data and it's.

Like, it's really interesting what actual proprietary.

Data you ultimately get. Sell a compilation of different license deals. It gets interesting like what IP actually is because it's this sort of AI and the technology parts getting commoditized. And I've seen a lot of folks even like you. I'm probably next time we talk you're going to show me some AI in.

House tool that you built that's like.

Automating components of your integration planning. This is so accessible to do with all these no code platforms. That's my rant, that's my view, that's the record straight.

At the same time I agree because it reflects a lot of the challenge that we have about what is allowed, what should be allowed. And there's going to be a lot of open source advocates and that the volume of technology platforms or technology streams out there is going to completely outweigh the regulatory. And there's going to be a huge need for simplification of the regulatory environment to make room for all this growth, because otherwise we're going to end up in Kafka esque world.

I'm working on an interview in Paris with. We did one on Scadden, but another one, it's going to be focused on the regulatory environment and just how it's just changing, but also getting to be a very big overhead on all these deals, which is good for lawyers.

They're going to be benefiting from the environment as well. You're going to need an AI prop. I have a friend who's also founder, Dan Rogos. He's created this tool that aggregates all the legal background used by notaries. And Europe is a great place for notaries to develop and grow and thrive. And he's just making it so easy for them to parse their information and get updates based on the latest. Because sometimes the more complicated the regulatory environment is, any change will trigger, I don't know how many consequences in different areas of business that you didn't know about. We're going to need to be able to go through this in a more seamless way.

I'm looking forward to it. There's a lot of good changes that we'll see out of this AI high bubble.

I also agree it levels the ground for some of the spikes, but it also creates good opportunity for growth.

We didn't talk about the freelancing environment. What's your view?

It's a natural element of the ecosystem in M and A, and there's going to be freelancing in any job that has to do with consultancy. We're going to have a healthy amount of freelancing. There are a couple of good aggregators in the industry that I've spoken with in the recent years. It's definitely a good avenue for companies that are not necessarily seeing a benefit from implementing an internal M and A department. They're going to outsource the things that they want, a quick expert to step in and settle things for them if they need another pair of hands on deck to deal with a transaction that is taking longer than it should have. The one thing that you need to get the balance right of, I find, is that you need to reduce the learning curve. So if you buy one company every two years, you'd like to go back to the same people. You don't need to introduce your company to them all the time or every time. And then ideally you should Have a credible freelancing hub from which you can contract an agent and ideally should be the same if possible. And that's how you can both benefit from some knowledge accumulation that they know your company, they know what you're about. At the same time, you don't have enough work for them to be in house or to be fully employed.

You kind of mentioned this. You know, the hub, the environment. The thing I'm optimistic about is more of boutique independent. And I don't know if there's a way that they band together in a way that drives efficiency. Because the traditional model I see is pretty inefficient. You have somebody that's very business development focused and they're usually incentivized on a revenue target. There's a quota to hit and then ultimately you're selling hours to hit that quota. If you look at how everything's evolving with AI, it's all a big driver of efficiency. You're still on this old school model that incentivizes inefficiency.

Right?

It's like build more hours. And people always tell me that we needed help with integration and we reached out to this firm and we just needed someone like you to come in.

And guide us a little bit.

But instead we got five people, we.

Got him, we got a bunch of.

Underlings, and they're all running around with checklists driving everybody nuts. And our bill keeps going up and up.

And then at the end of it.

We just didn't feel like there was a strong return. That's where I'm like, there's got to be something to shift there. With everything happening. I feel like you want the experience.

I find myself threading a lot in this conversation to all my friends in consulting out there. I love you guys. I respect it.

Honestly. There is some truth too about the brand, because there is the CYA run. Having a brand stamped on things. You do it with a law firm. I just did it. We did a big tax conversion over a deal room. We had Fenwick we worked with. Ultimately we had to work with a bigger brand. We want to start building that relationship up. It makes sense to do it. We see it with the consulting firms. Billion dollar plus deal. There's always a big four label somewhere on there. Even if it's a sizable deal, It's a top 20 consulting firm. And I get that to the degree. But again, we're going back to this wider ecosystem of all these deals that are single M revenue. And that's where I think there's that opportunity to see that emerge. And that's where it gets interesting to say, hey, can I get somebody like you with experience leveraging AI tools, driving all this efficiency. But I'm focused on getting that next leadership experience as opposed to here's this playbook. And then the IP's changing too, because nowadays all the templates were always coveted. That was always the only IP that consulting firm really had. But now you can use any AI tool to generate all kinds of checklists. Especially you put the variables in, you start putting comparative variables of here's a little bit about our company, here's a little bit about this target company. Can you help me build it? Some kind of diligence and a guide?

Certainly, yeah. What I like about the fact that we're bringing some reasoning power from AI is that you can use all the accumulated knowledge of the industry. We already had this at our hand in our mobile phones. Now we have a reasoning, let's say all around wrapping tool that goes through and parses all the information and says, given what most of the people that have dealt with your problem faced later on by making this decision, this is what you need to think about. And then you're going to be able to ask, okay, so why? This is the one thing that I like about AI chat boxes or brainstorming with a why are you giving me this answer? And then it needs to produce arguments that I sometimes agree, sometimes I disagree with, but at least it educates my knowledge of the information background that I'm not that familiar with, where I couldn't parse through in 15 minutes if I had the time. I'm very optimistic about the future when it comes to all the moving pieces that I see out there right now. I'm strongly in favor of, of using them responsibly, both from an ethics point of view as well as not expecting them to be ideal from the very beginning. Just be mindful and we should be reading through the background information to make sure that there's no hallucination behind it. But otherwise, when all of this settles, I'm pretty sure we're gonna be left with some really good tools.

Yeah, the tools piece is gonna evolve. We don't know what's to come because just like that first cell phone.

Yeah.

And then the people side, it's less like having a whole team just pushing a process, but more of that experience that's really enabled with AI makes things interesting. So it's going to be, I'm curious to see how that ecosystem evolves.

Afraid that AI driven tools are going to break or make mistakes. And I agree with that. That is a risk we should be thinking about. Sometimes we give them access to more than we should or more than we feel comfortable with, like our credit card or stuff like that. But we also made when I started my first job subject to the generosity and forward looking optimism of a childhood friend of mine, Valentino Urdaki. He used to be part of the department where I started working in university. Right now he's running IT services for managing director for IT services in Accenture Americas and EMEA or so his CV updates every 15 minutes. He gets promoted, he gets more stuff to do his brilliant guy and two weeks into my job I deleted his hard drive. That's how much trust he had in we both recovered well from the experience and I don't trust AI with that kind of power right now.

It's got to be an enabler, not a dependent.

So learning from that, I am very cautious with what I trust automated tools with and I think we all should be. But there will be errors and we need to be more mindful of those margins of errors. How much are we willing to take and how do we test this in a sandbox before it goes live? We're going to need to do it at some point.

I got some more stories for you.

About some automation experiments that have gone sideways. Interest but good learning experiences.

Before we wrap up, I got to ask you what's the craziest thing you've seen in M and A craziest thing.

In M and A the more you see it starts to look normal. I did see one thing at some point. I'm American company coming to Bucharest, Romania. I was born and raised and educated in Romania and they were going through due diligence with a local established business. They were not allowed in one room of the company. And regardless what this American company representatives tried because they're very well educated, due diligence people, professionals, they couldn't get an answer why they're not allowed in that room. We can speculate. But the deal went off. It just didn't go through. It was a loss of trust and clearly something was in that room that would have made the deal go wrong anyway. And it was the immaturity of the seller that thought that they can pull that through. I found that very surprising. I thought that this is crazy. Nobody's going to allow this kind of a red flag on their list.

Was that a literal sense of where the bodies are hidden?

Romania has gone through various stages of changing towards more western values of the 90s after the 89 and 90s and there were some leftovers in that room that if the Americans would have seen them, they would have run away anyway.

Wow.

People speculated there were communication equipment in that room and all sorts of other things that exposed the business to control beyond their their reach. And yeah, I'm pretty sure that due diligence people would have not accepted whatever that was to be prevented from, you know, accessing the premises and asking questions about everything they're going to be paying money for. Big red flag and today's days. This is not happening with physical premises. It's happening with financial reports. Sometimes people try to hide things and we should be trying to making sure that we ask all the right questions and get all the right answers before we make a decision.

Got to do your diligence. True, Shifra, and this has been a great conversation. I appreciate you taking the time from doing deals to help me become a better M and A scientist.

Thank you. No, thank you very much, Kison. You have a way of asking the right questions to produce the best outcome out there. Seeing some of your many of your podcasts. Very happy to be part of the program.

Oh, it was a great conversation. I challenged you a little bit.

We didn't use the script very much on this one. Those of you still listening, my fellow.

M and A scientists out there, I love to hear from you. Let me know what you thought of this podcast. Reach out to me on LinkedIn. I actually took my privacy filter off cause you had to put the email in there. I don't know how long I'm going to keep it.

It's like every day I get so.

Many of these connection requests. But reach out to me. I'd love to, but send a little note so I know that you've actually listened to the podcast or something like that. I'll make sure I connect with it. I want to get some feedback. Let me know what you thought of this podcast. You have some topic ideas that we haven't covered. Love to hear that. Anything else? Criticism? I'll take it. If there's things it could do to improve this format, I love hearing those ideas as well. Till next time. Here's to the deal.

Here's to the deal.

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