Integration Strategies Suited for Modern Business Landscapes

I'm Kisam Patel and you're listening to M and A Science, where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals.

Hi, this is Kisan with M and A Science. Today I'm here with Nitin Kumar, seasoned C level operating executive management consultant in the TMT sector. He's done over 1000m and a transactions, including over 75 integrations. Consults CEOs, boards, investors and leaders on how to best transform business models to leverage disruptive tech and M and A. He's led organizations ranging from startups through multi billion dollar companies. Notable Exec roles include HP, Deloitte, PwC, FTI and others. How are you doing today, Nitin?

I'm doing well, Kishin. Thanks for having me here.

You know, if you just want to start off with a brief on your background.

Absolutely. So this is Nitin Kumar. As Kishan said, I'm a seasoned veteran in the M and A world. Have done several hundred or probably over 1000m and a integrations. Most of them have been on the diligent side, which gives a lot of valuable insight into what comes downstream, which is really the integration side. And obviously have been very heavily focused on the tmt, which is tech, media and telecom sectors. Occasionally played outside of those, but off late that's where all the big deal flow and the volume has been. So I'm happy to be here and happy to share my thoughts and insights.

What do you see as some of the greatest challenges in the M and A integration planning and execution process?

Actually taking a step back.

Right.

The first and foremost thing is that the business environment over the last two decades has significantly changed. The M and A integration process has been stuck in the 1990s forever. There are many things that are happening in the business environment, particularly looking at we are in the middle of seven or eight tectonic shifts in technology. If you think about it, some of these ships even conflict with each other. So let's go through them.

Right?

Are you gonna be on the product side or are you gonna be on the cloud? Direct? Do I do cloud or do I do edge? Do I centralize with an SDN or NFV kind of a model or do I decentralize with blockchain? The very same guys who are in the brick and mortar are going and buying E commerce and digital, whereas the big giant Amazon is coming and acquiring brick and mortar like Whole Foods.

Right?

And then the apples and Googles who are monetizing Data have shifted towards the voice. And the telecom companies who are monetizing voice before are now monetizing data. And then if you add a human to machine, real to virtual, close to open, the business environment is complex and conflicted and the integration process is not agile enough to adapt to these changes. They're still following a very linear pattern when it comes to both strategy planning and execution. And over the last few years there has been a shift between the process and piece of the M and A integration and the value creation piece. And if you think about the process, it's really the infrastructure. You can put governance under that, you can put David planning under that, you can put your functional checklists under that, you can put your financial models and linear way of creating value under that. The value creation has really shifted into the functions. And if you think about it, IMO turns the cranks and is the infrastructure. And it's a very important piece of the infrastructure. But people have figured out the science in that. Whereas the value creation has to adapt on the fly and it's strategy and operations that creates the value, whereas IMO is the infrastructure. This has also changed the way IMOs are configured. And we'll come to that in a.

Little bit when we talk about some of those industry inefficiency shortcomings. Is there anything you can add in terms of specific causes of those challenges?

I think there are a number of different things here. First and foremost, the way people think about MA has fundamentally changed and in a number of different ways. Firstly, the definition of the serial acquirer has changed. It's not about bringing two companies together, combining the back office and taking a bunch of synergies. It's been a little bit of a change in terms of how you really think about the definition of a serial acquirer in itself. Now think about a two by two matrix. On the Y axis draw what's an occasional acquirer, a frequent acquirer and what's a serial acquirer. And on the X axis draw the types of deals. You've got consolidation, you've got adjacencies, you've got technology tuck ins, you've got carve out integration, you've got acqui hires. So today you're a serial acquirer at a certain point in time for a certain type of a deal. What does that really mean? It means that you don't have a single playbook that scales across time and across deals, which creates a problem in the way people think. And which is why I say the integration process part is by and large okay. But the integration value creation has been stuck in the 1990s or 2005 at best. Life has changed a lot after that.

How do you see the industry overcoming those type of challenges?

I think there is a number of different elements that are at play here. Firstly, integration can be broken down into two. One of them is functional integration, which was the norm in the past, which is really bringing in functional capabilities, fusing them together, driving economies of scale, cost efficiency and potentially speed to market. And the likes today, given the tectonic shifts that I have actually articulated, what we are thinking about is to take on the structural forces which are really the barriers on how the market's changing, how the industry is kind of adapting to the new world order. There are disruptive business models at play which are altering the fundamental economic logic underlying the business model of companies. So the functional integration does not scale. Bulk of the deals today change or adapt to a new business model. And if you take a classic example of this, a lot of these deals are done to plug capabilities in their technology, stack, services, products, or plainly drive revenue synergies. Cost synergies tend to come out of a specific functions, finance, hr, it. And there are finite ways on how you take these synergies per function, pull the right levers on duplication, rationalization of process assets, headcount and all that. And I think that comes from finite function. And you have specific finite levers to pull. But the moment you talk revenue synergies, it doesn't come from a single function. You got to get the whole machinery between sales, marketing, product pricing, customer experience, service support, all firing in unison. So what does that mean from an IMO configuration perspective? You got to go and configure the IMO cross functionally, ideally by value driver.

Right.

And value drivers for those who are new to this game, is those 20% of the tasks that are responsible for 80% of the value. So you configure the IMO cross functionally by value drivers. The second interesting trend here that I'm noticing is that there is a lot of emphasis and effort done on diligence, which is kind of different. One, there is technology diligence that is coming up into play because more often than not people are acquiring technology stacks and people want to know, and investors and buyers want to know whether the technology stack is stable, scalable, interoperable, extensible, does it have the adequate security? Do I look at performance? And it is slightly different from a commercial diligence, which is looking at structure of the industry, market, industry competition and all that. What people are looking at from a technology diligence is a number of different questions. Where is the value locked? Is it locked in a particular place in the algorithm? Is it in the interfaces? Is it in the openness and xyz? The second thing is that does this thing scale? I mean you can have all the musical instruments, but the orchestra need not necessarily sing or at least make the music that your customers want. And even if it does make the music, does it really be effective inside a garage or can it play in an amphitheater? And if you want to go into that direction, how much investment do you need to pour into this thing to make it comparable? The other trend that we're starting to see is customer diligence. Again, there is a Venn diagram between commercial customer and technical diligence. Commercial diligence is really talking about the structural forces in the market. As I mentioned before, the commercial diligence is getting into more. How do I quantify these revenue synergies and kind of make them very tactical and executable? So that diligence process has kind of expanded outside the conventional ops and commercial diligence in spreading tentacles into both customer and technical diligence. The other interesting thing that we are starting to see is how do you create value under uncertainty? Now value and synergy are two different things and wargaming is an interesting technique that kind of solves this problem. If you take a classic example of Microsoft acquiring Nokia and put some head to this, the deal thesis was sound. Microsoft had Windows Mobile and they didn't have a headset. They could really go after a marketplace because Windows Mobile could integrate into the other bells and whistles. Microsoft had. It's talk about SharePoint, Exchange, Office, et cetera. And at that point BlackBerry was on its decline and the thesis was let's capture the enterprise space. And where the assumption went wrong was the Apples and the Samsungs of the world are consumer phones and they would never come into the enterprise. So that was an assumption that went wrong. Having said that, fast forward six months. The velocity and ferocity by which both Samsung and Apple came into the enterprise altered who is the leader in the enterprise space with respect to mobility. Now given this dynamic, you can take all the synergies between Microsoft and Nokia deal. You just didn't create enough shareholder value. So I think the other trend that is going in favor of the investors is that focus on shareholder value less on the synergy side of it. Now granted synergy is one element of it, but if you have a very rigid playbook with A very rigid approach to project management and executing a playbook in an un agile manner. This is definitely not going to create value. You can take all the synergies but doesn't translate into shareholder value to back.

Up, one of the things that you mentioned was on the aspect of the cross functional alignment and during integration and alignment around the value drivers. Could you talk a little bit more about that specifically?

So there's a lot of ways the deal can go wrong, right? And typically there are five or six reasons for that. One of them is that there's a lack of a definitive governance structure to the cross functional model. All the governance structures are built towards the functional side of it and that kind of creates a problem.

Right.

The second is the misaligned incentives. The machinery between the Cortev people, the sponsoring business unit and IMO are typically not well defined and aligned on who is responsible for success of the deal and creating that shareholder value. And I think that's very important to get right. And now the three in a box models, which is really the person responsible for the integration, the BU and the Corp dev guys, they're kind of starting to get team incentives on making it work. The BU alignment and ownership and accountability is a little bit patchy and I think there's got to be sponsorship and ownership around that coming in the form of both incentives and governance. On the other hand, there's always light or no commercial diligence done given people think that they understand the business they're in. And definitely that commercial diligence doesn't really go into the nuts and bolts of the technical and customer and kind of bringing all that together.

Right.

So that's been a little bit of an issue here then. If you look at the deal maturity by business unit or operating unit or geography that kind of varies. In any given company there will be a certain business unit that is acquiring more or acquiring a certain type of a deal more. And their maturity may be slightly different than some of the other parts of the organization. And this isn't very tightly linked up. People also often underestimate the ability to execute on revenue synergy which is modeled in. Now sometimes it's baked into the valuation, sometimes it is not. Having said that, the ability to execute should not be underestimated. And obviously the infrastructure with the incentives and governance structure and sponsorship all have to be put into place there in.

Terms of revenue synergies because I always hear challenges about this and it almost positions teams to focus more on the cost synergies aspect of it. What are those challenges Specifically, firstly, there.

Is still a lot of debate in the industry whether people pay for revenue synergies or not. And I think you'll hear mixed views in the industry. Having said that, whether you pay for it or not, it's always modeled into the shareholder value and the market expects that, Right?

Right.

A lot of times the product and the sales teams are not in unison. And sometimes that really comes in from an org structure standpoint without naming this particular company. Many years ago, there was a revenue synergy deal done. If you really look at it, this was a very large global Fortune 50 company. And for 100 years, or many, many years, their sales force was structured very regionally, which means they had marching orders from their regional masters. Whenever you acquire a company and sort of put them onto the regions or the countries, they're not incentivized to sell this. They take regional marching orders, they meet their quotas, and the deal value is often diluted with no added incentive to sell the new product or the new service and whatnot. The second big issue is that there are very underestimated levers inside revenue synergy. People intuitively go after sales and product, but there are underutilized levers like pricing, like brand, like customer experience. And all of these aren't really formulated baked into how people capture revenue synergies.

Are there any areas that you think teams should maybe think about focusing or approaching those aspects of it?

Yeah, look, the way I think about it is that revenue synergy has to have a little bit more science and a little bit less of art. And I have actually published a couple of articles and people can take a look at it when they are in their free time. I really believe that integration people need to be part of the integration diligence upfront. And maybe there is a need for another discipline in addition to commercial ops and technical diligence called integration diligence. I've started to see this in a little bit of a pattern that's emerging from good acquirers, not necessarily the big acquirers or the shrill acquirers, from the good acquirers, that there is an integration diligence, which is a quantify. Not only quantifying these synergies, but also baking them into value drivers and stress testing them through simulation or wargaming before they can actually go and execute these. So as I see in the next one to two years, integration diligence is going to evolve into another discipline that people will think about. The other way I look at it is that the revenue synergies need to come in three distinctive waves and the common mistake people try to make is that trying to pull all these levers together and not sequence them well enough, not understanding the risks that come with it. Let's take a classic example here on what those three waves look at. I think wave one has four primary levers for any acquisition to occur. On the revenue side, you either acquire a brand, you acquire a channel, you acquire a product, or you acquire a customer segment. You can call it an industry vertical or a geography, or however you define a customer segment. At any given point of time, you're acquiring one or more of this. Now, more often than not, people are not buying a company to change their brand and, you know, assume the new brand. Having said that, a lot of that has happened. Considered the Rovi and TiVo acquisition. In theory, Rovi acquired TiVo, but they kept the TiVo brand name. Whatever be your primary reason for acquisition, if it's a brand channel, customer segment or a product, the other three have to very quickly rally and support your primary acquisition lever. Also, a lot of times people think that there is no way to integrate and we've started integrate revenue synergies before getting to all the answers. I think that's not true. There is integration upfront in the form of alignment. So in the best case scenario, your most profitable products are in your most efficient channels hitting the right customer segments and you have the best brand positioning there. There is the exact opposite and everything in between the integration diligence or some part of your diligence, whichever name you can give it, has to figure out this alignment because you will know what is the direction of momentum, whether you want to incentivize, upsell, cross sell, change the brand positioning, change the value proposition message. The moment you do this alignment right up front between these four levers, you get the momentum and then you go into wave two of pulling the levers of revenue synergy, which is really product bundling, pricing and getting the pricing right. Because now you know the direction of momentum and sales incentives. And sales incentives have to be really tweaked in the direction of the momentum you get. A common mistake is to start figuring out the sales incentives in the first 30 days itself without knowing the direction of momentum. And that can cause a lot of heartburn in the salesforce. That's sort of wave two and the wave three is really new product innovation, which can take a much longer time, be it new product launches, be it new R and D and new features and functionality. Thinking about revenue synergies and integration in these three waves along these three Levers can ease a lot of the pain, but the alignment on those four levers is really non negotiable when it comes to deal value and has to be done upfront. You can call it customer diligence or you can call it an integration diligence, but that really has to be done to determine the direction of the momentum.

Very comprehensive in terms of how you think through integration. One of the things that I thought you mentioned was really piqued my interest was looking at integration diligence and really getting that factor up front earlier. It seems like we see this time after time with companies as they mature, they sort of naturally go in that direction where integration planning happens earlier, so forth. But even bringing it and expanding on it in terms of perspectives around having integration people early enough in the process where they're assisting with validating the value drivers in the deal. What are your thoughts on that aspect of it?

No, I think that is a trend that is getting more and more visible. And as I said, it's not necessarily the serial acquirers who have figured it out, it's the good acquirers who have figured it out.

Right.

And even the skills of the integration people have changed a lot and there's a lot desired to be changed further. The process people aren't the right people to bring up front into the integration diligence. It's not the people who do your PMO or IMO stuff. It's not the people who do your governance and run the integration machinery. It's really the people who understand the value creation and come from the business are the right people to partner with the or be even embedded into the integration team who are brought in upfront. And the way the integration diligence is thought about is the framework on the revenue synergy side. Having said that, there are sort of three buckets of it, right? The value protection side of it, which is what takes you to day one. Think about elements like brand protection, customer retention, channel conflicts, product value dilution. Is the salesforce going to sort of discount the hell out of something and sell it? So that's the value protection piece and then comes the value capture piece which is really. Can I rationalize the sales force? Are my R and D dollars being spent? Do I have too many brands that are confusing the market? So you capture the value from the really, really unrationalized or confusing parts of the business and then you come into the value creation which is the revenue synergy piece. And these three bodies of work really inform the integration diligence. And I think People who are cross functional in nature and teams that have expertise in pulling one or more of these levers have to be on the table. It's not necessarily the integration people who are running the IMO are the most qualified people to do the integration diligence.

Who would be some of those specific people from the business units. And oftentimes we think about the challenge just being that they're already in a full time role running the business. So I guess how would you sort of pull them in to be more involved with integration?

There's half a dozen different configurations that I've seen in the industry and I can base it talking to about a couple dozen clients a year.

Right.

There are rotational roles that business unit people take into the integration organization for a finite period of one to two years or X number of integrations. Obviously the corporate strategy and the corporate development people understand the pipeline that's coming in there. You can preempt a little bit of this thinking. Most of them are what deal type are they? Consolidations, adjacencies, stuck ins, aqua hires, new business model integrations and whatnot.

Right.

And the second part of it is that are they sales heavy, are they product heavy, are they brand heavy? The consolidation and adjacency mergers are a little bit easier to figure out. The new business model is very difficult and a lot of my clients in the large enterprise integration offices struggle with it. And let's take an example of this, right? Selling licensing software is a very profitable model. You sell it up front, get the money, then you go and sell software maintenance which is very high margin business and you've got a customer for life. Now, lo and behold, there is a transition into an as a service model which is either a SaaS or infrastructure as a service or anything as a service, you now acquire this company. You're not getting all the money up front. It's not your order to cash or even lead to cash is not configured properly to absorb subscription. So your whole lead to cash process is kind of disrupted. Second, these products are just doing the same functions in a different delivery model. It's just licensing versus SaaS. So if you're not careful, one model is going to cannibalize the other. In no definitive terms do people understand this the salesforce system to fight each other. There is brand confusion and then you know, there's a number of different ways you can technically look at this. And then people who are most qualified to do this are people who are people in the business unit. Now the other way the skills have changed is that integration in wave one used to be staffed by IMO PMOs. And there is a lot of that bag. It's still continuing in the world. Then came people who were operationally very strong and functionally very strong and had good IMO and project management skills. That was sort of wave two. Wave three has been a very drastic change wherein companies are still trying to adapt. And from what I'm seeing is that you need people with a strategy bent who are savvy with integration and value creation and have a people, culture and product lens on it. And it's very hard to get the skills within one person. So you have to rotate a number of different people at a given point in time. Looking at your deal pipeline, on who are the best resources to create value, looking at my one year pipeline or even aspirational targets, and that's the way to do it. You also take a cohort of these people and put them through integration training which is fairly immersive. And when I say integration training, it's not the legacy integration models that these companies have been used to when they thought about themselves as serial acquirers is the integration in the new world order which also goes through some of the techniques and some of the frameworks that I mentioned before. And these people understand their business and the product. And the moment you give them these tools and thought processes and nuggets of how to create value, I think they can hit the ground running and can team up with the legacy integration folks and good PMOs.

So what does your dream team configuration look like?

I think the dream team configuration also has half a dozen different configurations. But let's take an example of a new business model integration. I think you need people from sales, you need people from marketing, you need people who understand the product very well. You also need pricing and branding people, but they're not full time in it. Obviously the culture is a big element and you need some HR specialists. Again, not necessarily the operational side of HR, but the organization development side of HR people in into this area.

So we talked about the transformation of companies business models. How has this impacted the approach to change management and integration?

Yeah, so change management has often been thought about in HR thing and has been handed over to hr. I think that is those days are long gone. Change occurs in a specific business unit and at a specific given point in time. So we need to go beyond the touchy feely part around drawing change curves and employee engagements and all of that. I think that's important. Getting the pulse is important. Having said that, it's Very important to size the change and get into the specific aspects of what is changing. Is people's location changing? Are systems and processes changing? Are incentives changing? Are reporting relationships changing? And where is that change? Is it in a business unit? Is it in a function? Is it in a geography and size of that change? It's almost imperative that the sponsoring BU or the function leader owns that change. And it's HR facilitated, not necessarily HR led. Those are a full gamut of things that have to be sized up during integration. Diligence can be sized up by any of the following disciplines, but it has to be caught up front. And the magnitude of change has to be assessed with a level of specificity so that you can design the right change interventions into your integration plan and also mitigate human capital productivity and overall value dilution of the deal there. So I think, to sum it up, it is really not an IMO led process. It's an IMO governed process which is facilitated by HR and led by a business unit. Previously it was the exact opposite. It was really led by HR or led by the IMO in certain cases and facilitated by either either of these parties. And the business unit would be the last recipient of this change. And that's kind of changed a lot over the last few years. It is just going to continue to see some change. And depending on what aspects of the culture you want to preserve and what you want to change.

What are some of the biggest challenges you've seen with change management and even specifically how has that impacted or changed as well when it comes to integrating a transforming business model?

Look, I think one of the big things that has been lingering around is culture. And if you look at any integration survey or any deal survey and you ask most of the C suite, what has been the big challenge, they're going to say culture, but nobody's really cracked the code on it. And if you really look at culture, it's very hard to change on a Monday morning, probably not even in three to six months. It takes years to gradually shape the culture. It's not something that you can take somebody and immerse them into the acquiring organization's culture. Also, sometimes you don't want to change that, right? I mean, there is a difference between a financial acquirer and a cultural acquirer. Sometimes you acquire somebody's way of doing things, which is their culture, and you don't want to spoil that. It's really important to not try to do too much on this side. The first thing I would also look at is that don't worry about changing culture. It's not my culture or your culture. And culture is always contextual. There's nothing called right or wrong. A big company culture is not necessarily fast and entrepreneurial and a small company startup culture isn't exactly structured and scalable. But there's something good about both and one doesn't necessarily fit into the other. The best way to do this is that you need to isolate the top three behaviors that need to change in both organizations. And both executives need to combine forces and align on what are the three things that we need to do. And actually culture change is nothing but aligning behavior to results. And once you agree on those top three or four, you can then bake that into the integration plan with the right incentives and the governance structure and then go and cascade this into the organization. The more people buy into those top three behaviors and agree upon those, that becomes a lot easier than forcing change through creative change curves and employee engagements and trying to neutralize the culture within a week or a month.

Right.

It's just focus on the top three or four behaviors because if you're a serial acquirer, there's more acquisitions coming down the pipe and then you're going to try to culture neutralize everybody and it gets counterproductive. With Flight of Talent.

Right.

It's really focusing on aligning the behavior with the right results underpinned by the right incentives. And the more people agree on what are the top three behaviors to change, the culture conversation gets progressively easier.

How do you see integration today and evolving going forward?

Yeah, look again. Go back into the trends.

Right.

The main thing is that there is going to be a lot of automation and the integration process need to move from a very rigid linear process into agile. That's number one. The second thing is that there's a lot of automation coming in. How do you leverage an SD WAN to sort of minimize the load on the network integration? For example, there's going to be artificial intelligence and robotics. Who's going to do a lot of your contractual diligence in future. I have also seen one particular pilot on using drones into the supply chain diligence. So the technology leverage is going to be pretty critical in automating certain parts of the M and A process. Number three, I think the staffing and configuration of the imo. As I mentioned before, you need to change from a functional approach into a cross functional value driver approach, retooling of the M and a integration professional. The process piece, while important, isn't the one that creates value. It's the strategy and operations skill that supplement them. People are going to pay more attention into new business model M and A as hardware companies try to pivot into more IoT kind of stuff and tie them back into the seven or eight technology shifts that I talked about. Every company, be it in any given sector, be it retail, be it healthcare, need to adapt in size, shape and form to these shifts. And these shifts are more structural in nature. So taking that functional integration and adapting it into the structural barriers and constraints, the headwinds or the tailwinds, and actually moving with that. Obviously synergies are just informing shareholder values. Synergies are not shareholder value. So we need to think about it that way as well. The most important thing for the integration process is that how do you develop the capability to execute under uncertainty and preserve and create the value of the deal when the mercenarial, rigid M and A integration playbook doesn't work and you have to pivot very quickly and adapt very quickly, moving into changes that impact your customers, shareholders, regulators, real time. And there is more changes and more uncertainty in the business environment coming, both in the political landscape, in the regulation landscape, that's going to change a lot. Obviously, we have seen the advent of the platform from the product. And every time you pitch the product to a platform, the product loses and the platform wins.

Right.

If you think about an Airbnb or an Uber, bulk of the value creation lights lies outside the firm. You can be a driver, eater and a writer on the same day. So how do you think about your customer?

Right.

So that's classic platform stuff. Your R and D in the terms of open innovation and open source can lie outside the firm. So how do you control that kind of a workforce? Obviously the finance and valuation that is tied to a network effect, which is really more drivers you have, the more riders you get, and vice versa. How do you do that? So the valuation considerations are also outside. Then you have curation and quality control, which really means matching the right people to the right content or the right thing that they're looking for. So when bulk of the value creation lies outside the firm, how do you create value from all these functional plays?

Right.

And if you think about the platform plays, Google, Facebook, Apple, Salesforce, these are all platforms with one or more of these functions lying outside the firm. How do you drive integration value from this? And I think that's potentially for another session here, but these are some things to really think about and how products and platforms play very differently. And when I say platform, it's the platform As a business model, not platform, as a technology. So this is going to create another interesting shift in the way people think about it.

I like the part about having these flexible playbooks and that change there because I think a lot of people are still dependent on rigid and having things.

Agile is the name of the game.

I feel like our industry is really slow because I'm a big advocate of agile. We're running it in our company and I've seen it approach and transition to other industries. I just see M and A is really slow in a lot of ways with the technology piece. But even agile, how do you see that changing in the future?

I think there is a lot of deals that are starting to not create shareholder value and the questions are starting to just come up. There is more activist M and A happening and those activists are starting to question past acquisitions. So I think one or two of those have to really come into fruition and at scale for things to change. Having said that, the best acquirers are changing, at least thinking of changing and have adapted one or more of these practices that I talked about before. But I do agree it is a slow process and part of this is really accredited to the legacy skills that we have in the M and A integration people and even corp dev people. They have still not adapted to the changing business world today and the environment. So as the valuations soar and deals stop creating shareholder value, people will adapt and people would adapt for the right reasons. For now it's slow. I agree.

Only companies I've seen adopt Agile have been Google, Atlassian. Do you think it's something that's going to trend with the tech companies first just because they have it in their organization? Be it tech engineers developing software using Agile and it's sort of building off of that or is there other means that you think it would progress the adoption?

I think it will be tech led largely given the innovation has been tech led. Having said that, there is no reason why the others cannot lead it because all the other companies are starting to buy tech now. There is retail tech, there's education tech, there is healthcare tech. And these people actually don't have the baggage from the past. They just have to be educated so that they can leapfrog their legacy processes and go in now. The good news in tech is that they already have a proceedings and they know what to do. The bad news there is that there's a lot of baggage there that needs to be overcome. So it's very hard kitchen for me to answer who's going to take the lead, the capabilities naturally reside in the tech or the TMT sector. Having said that, the opportunity to go and rewrite the rules of the playbook lie in the other industries. So it's, I think the verdict on that is TBD for now.

What's the impact on M and A strategy? Due diligence, valuation, integration.

So we talked a lot about the integration, on how the integration diligence needs to be structured, the uncertainty and how the IMO needs to be configured in the new world order. The diligence as well. We talked about the three or four new disciplines that need to be done. The M and A strategy is extremely hard today given all the tectonic shifts in the technology. And now it's going to continue to evolve. And as I just said, the platforms itself are causing a new issue. If you just look at and read the news of what's happening, Verizon just wrote out 4.3 billion on oath, which is the combined entity of Yahoo and aol. If you think about what was that strategy, taking two products and trying to pitch them to compete against platforms like Google and Facebook.

Right.

So the thinking wasn't well baked in there. And if you look at Microsoft acquiring LinkedIn which is a platform, and GitHub, which is a platform, I think the operational integration would be okay from a finance perspective or technology perspective. It's still to be determined whether they can create value on A the revenue synergy side and B think through what it takes to build a platform level capability of an M and A. As I said, the new business model is not only SaaS, IOT or all that. I mean platforms are real and they're here and they're here to stay and here to scale. And with decentralization and blockchain, which will become a reality in the next 1, 2, 3, 4 years, is going to even alter the economic logic underpinning the conventional platforms. We're going to see D plats or decentralized platforms. So that's all going to be very interesting. The message for the M and A Integration Professionals Corp. Dev Professionals is that, you know, I think the skill set that got you from 2001 to 2013 has drastically changed. I think between 17 and 19 there's a lot of change and between 19 and 20 there's going to be even more change. So there's ever more happening here. So stay current, relevant and you know, adapt to the new business world order.

Can you provide an example of one major deal failure and a major deal success?

So the deal failures are a heavy Word because there's a lot of PR machines at play and a lot companies are been articulating success differently.

Right.

And success can be defined in any number of ways and you can sort of articulate that. If you just take a look at the Yahoo and Verizon deal that I just talked about.

Right.

You may have taken the synergies from it, but it didn't create shareholder value ultimately at the write off because people realize products cannot take on platforms. Definitely not at a galactic scale where the Facebooks and Googles are playing.

Right.

So I think there is practices that need to be upgraded there and platform think needs to be embedded in there. We also talked about the Microsoft and Nokia deal which may have created the synergies but didn't take shareholder value. I think the successful deals have been maybe Oracle and netsuite to a certain degree. And I think after a long time they've got their fusion story and the netsuite story together and they've sort of moved on. Who plays in what customer segment have kept NetSuite as an arm's length but also pulled the right levers and it seems to have all the musical instruments there that can create the orchestra that sings. But I think one more year we will figure out how all this plays out. Having said that, they've got something right on that deal on how they did the SaaS play by bringing it not only on top of their licensing model but also an existing SaaS business. So that's something to watch out for. I think Aqua hires continue to mature and people are starting to get large scale Aqua hires.

Right.

Google is a classic example of who does the Aqua Hire deal well.

Right.

There's adjacency deals that have been done well in the industrial world. There have been new business model deals that everybody is struggling with and hopefully the Playbooks will mature and companies will start to think about a different.

Then if you were to go back and look at those different transactions you mentioned, is there any general theme in terms of one thing that you think these companies could do different to increase their probability of having better success?

Yeah, I think everybody needs to just step back and see where their integration processes are with respect to what they're buying. As I said before, just understanding your own capability on what type of an acquirer you are and at what given point in time and what's your pipeline coming forward and what you have done in the past. Just a postmark of that in a very objective manner without being emotional is a good start. And what new capabilities and people you need, particularly the processes. If their whole organization is moving agile, there needs to be a thought process on why the M and A process is not adapting to that. So you should not be out of sync with where the business is going and where the environment is going on the whole.

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