Managing Infrequent Acquisitions

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I'm good, thank you very much. The good weather, I think is behind us. We've had our summer. We've now got a typical British cloudy summer, but good. Yeah. Looking forward to our chat and looking forward to sharing some of our learnings.

Can we kick things off by telling us a little bit about your M and A background?

My M and A background really started five or six years ago when I started off life as a stockbroker. So I had an insight into the world of finances and how things Five or six years ago, the business that I was working for, still working for a company called bullhog in here 13 years. We were in conjunction with our parent company buying a business in the Netherlands and because at the time I headed up the international business, I got quite deeply involved in that acquisition. The acquisition went well and at the end of that time my CEO said to me so that was good. Enjoyed working with you on that and clearly got some talents in that direction. We're about to go on a more dynamic M and A spree. How would you feel about taking on that duties a little more robustly and be responsible for corp dev, M and A. And I gladly accepted that. That was five, six years ago. We've made seven or eight acquisitions over that time. They are regular but infrequent. And we've worked out what I think is a really good cadence on how we've been through that time through periods of peak activity. The second deal we did was a bit of a baptism of fire for me. We did a three for where we bought the three companies simultaneously. I've learned a lot over that time and particularly on how to keep fixed costs relatively low but still be able to scale and deal with whatever opportunities come our way.

It's a learning curve. Keep learning as you do these deals.

Hey, no buyer is ever the same. No market conditions are ever the same. Big challenge at the moment over insurance to try and get R and W insurance is tough. The insurance companies are busy. Used to expect quotes to be turned around in real time. Now it's a buyer's market from that perspective and they are not delivering to the same timelines that they have done previously. Which also causes a deal cramp at the end whereby you could expect to get the insurance quotes through. Now it's sort of an undefined because they are busy and they're getting around to it as quick as they can. But it's causing uncertainty over timing of deals. A lot harder to predict end of deals at this point in time. That being the main factor.

Yeah. There's a lot of changes in the market right now.

Yeah.

Since your company's doing infrequent acquisitions, how do you manage your corp dev team?

Small is beautiful, I think. Is that what they say? We have myself who heads up corp dev. We scaled the team back in the pandemic to really myself and Ben who works corp dev with me. Corp dev is not my exclusive role. It's a major part of what I do. But I have other activities within the business. There's two of us who keep the lights on, let's say in terms of market activity, in terms of market research, in terms of potential opportunity, outreach. And then we scale up if a deal comes into sight and then we get a deal. And when we're getting serious about a deal free Loi will then start to pick the team that's going to take that deal forward. We're lucky. We've got a great legal team. My accomplice in crime is our CFO Brian. We work very closely together. So we use the resources of legal, we use the resources of finance and we scale up pretty quickly in terms of building that assault team. Somebody who can get the deal done within a relatively short space of time and then other assets, which I'm sure we'll talk more about integration and who's actually leading the project. We can take people out of the business to assist on making deals actually happen as well as I do. You've got the two sides of the deal, you've got the LOI and then go through, get to sign and close. But that's really. Everyone thinks that's M and A. You bought the business. Fantastic, well done. That's where the work starts and that's where your ROI comes. Because unless you're in a position where you have a firm plan on how you're going to integrate that business or not, you might leave that business standalone. Really determines the success of the deal. It's important that whoever is thinking about M and A, it's not just about a shiny object in the distance, which you can say, we can buy that. But you've got a lot of time and effort and money that goes into these deals and you've got to be ensure you're delivering an accretive deal over the term that you define. Whether that's one year or five years. That comes down to your modeling and your M and A modeling and how you want to make that work.

Core team, very lean. Just two people.

Two people in the core team. Yes.

And then as you pursue these deals, it sounds like you're pulling people in from various departments.

Finance know what they're responsible for and we'll leave that side. Legal know what they're responsible for. I think the key person in any deal is who is doing the planning. Obviously, you know, I'm intimate with that and Ben that works alongside me. But to bring in a true integration lead that completely understands the business. So this is really a hybrid role. This is not somebody who has got huge amounts of integration planning experience in businesses. It's about somebody who knows your business intimately and can deal cross functionally in order to make the efficiencies that need to be made and ensure success. So that's a key person in the deal because that's not just in the lead up to sign and close, but that's in the first 90 days. 180 days are then critical to making that successful. So we normally cherry pick someone out of the business that has particular talents and will be particularly good on the deal that we're looking at.

Got it. Well, let's back up to the very beginning in the early stages of a deal timeline and think through specifically how you're managing people efficiently. What does that look like from the early stages of just sourcing deals?

In terms of sourcing, we know what we want to buy. In terms of no deals have been brought to us via third parties. We sort of laid our market out and laid our targets out. And there's about 200, 250 companies that we have relationships with that we track over time, which is relatively simple to do with one and a half people. In terms of keeping in touch with those businesses, keeping in touch with scale is always something that's important and they've got to be in their cycle and they've got to be ready to sell. There's no point in trying to buy a company that actively doesn't want to sell. The only way you're going to do that is to pay hugely over the odds to get their attention. And that's never guaranteed so much of M and A. It's a lot more human than people think and a lot of it is about relationships and certainly making deals successful. To have relationships with the founders, the key people in the private equity house you might be buying from is really key because deals get sticky. We know deals get sticky and there's always moments in a deal which can blow up and sometimes it's that core relationship and that trust that you build, you got to build trust in it micro amounts of time because there is so much mistrust that goes on in corp dev. You're buying a business. Where's the catch? What are they trying to achieve from that perspective? Keeping busy through the quiet times. If you've got target lists that enables you to do that and any business out there, even if they're only part time Corp dev and I would call those part time. You mentioned your business this year that's making 100 acquisitions. Way out of our league. We look at making one, two, maybe three acquisitions on an annual basis. That's not because we can't make more. We would scale up if it was accretive and we could do so. It's just within our segment. There's not thousands of targets. We're looking at a relatively small number of targets that we track and keep in touch with. And obviously everything that we do has to be accretive. We're not looking over the 10 year term, we're looking in a three to five year period as to it's got to be accretive and we buy Businesses from their accretive nature. Some businesses we buy from a strategic technology nature. We're taking on board technology that we know we want to hit that in terms of adjacencies from ourselves that we can then bring that into the business and sell that product through our own business.

Got it. So just the fact that your target list is not massive 200 companies that you could cover that pretty efficiently with one and a half resources, it sounds like there's a good amount of time frame just to nurture those relationships till they're actually at a point where they're willing to transact at something that would make sense for both parties.

You nailed it. That's where we are obviously in that tracker list. We've got primary, secondary and tertiary targets. We know the level of attractiveness of those businesses and sometimes it's waiting for those businesses to reach a scale that hits their financial dynamics or we're willing to pay slightly ahead of the curve. Historic 12 months revenue LTM. But now every business they want to sell on forward versus looking back. And obviously every company we buy has got amazing strategic initiatives where the numbers haven't hit the P and L yet, but they're going to. And the companies want rewarding for that future short term growth which they consider is in the bag. And again, I think that's become a new nature and a new nuance to the market.

Absolutely. It's a very different way of looking at deals. What happens when you do get to that point and you identify a target, you get to some agree upon terms. What does that look like as you move through a diligence process?

It will depend on how busy we are in the new world, the post Covid world. We've trimmed down the team historically. We've always used an advisor, a Merchant Bank DCP out of Washington D.C. we have through Covid done a couple of smaller deals on our own without their input. As we've learned over the last few years, we know enough to be dangerous on how to get a deal done, but we've always got them to bring in to run the process for us. We don't involve third parties in day one planning and in those 90 days or the initial launch period. But they can be very helpful managing through diligence. And having a third party involved can often be a great way and a subtle way of negotiating. Particularly when people are getting caught up on certain aspects of the deal, whether that be various numbers that come with the deal, networking, capital, calculations. Somebody who has been through that many times can help the other Side that is the side that we're buying. Negotiate that. So we've got two ways to go forward. We can build our team. We would take that on board, we'd bring in the assets we need and we would make the deal happen. If it's a larger deal or if we have multiple deals in flight at the same time, we'd always bring in DCP or somebody like DCP as our advisors who can help us steer us through that and keep the trains running on time. Because so much about making a deal successful is keeping those trains running in time. Hitting the deadlines and driving for a close date might always have to be flexibility around the nuance of that close date is. But it's about driving for the day because deal fatigue is real. And if you don't put the right level of resources on there, if you let certain conversations drift on certain micro negotiations because the deal is just one big negotiation again, people think you do the loi, you've got the headline terms, that's the end of negotiation. But the SPA brings out so many micro negotiations on what happens next. And there's a lot of moving parts. So it's not something you can under resource. I've talked about being cost conscious, but I would never recommend anyone under resources a project because if they under resource it you've got a huge capacity for the wheels to fall off and things to go wrong. And when things go wrong in deals, it's hard to win your way back.

How do you determine whether you're going to staff up internally versus use external resources?

Historically, we always used external resources. There was an opportunity, a company we bought back end of 19 and it was a relatively small business. It was a known asset where we had a relationship with the individuals and we decided it wasn't worth investing in outside resources in order to help us get it over the line. We did that very well. But really it's scale. The scale of how much work we've got going on in terms of what our capacity levels are and scale in terms of the business. If it's a large deal over a certain value, it's something we'll definitely bring in the third party to work our way through that. And I equally think if you're buying a business from a founder, very different dynamics to buying a business from a private equity or a VC house because the levels of competency and the levels tend to go a lot deeper when you're buying something from a professional institution who's selling an asset and tends to be slightly more complex.

Tell Me more.

If somebody's a founder of a business they will hopefully have advisors, please let them have advisors because if they don't it's again very challenging because they think they're buying a house and they apply the same techniques and they think done deals before. I know how to buy things, I bought houses, I bought cars, it's the same. I'm now selling my business, I've sold a house and it's complicated and there's a lot to be aware of. So I always like private vendors founder led businesses to have advisors, good experience. The most challenging deals of all are founders first time exits because there's certain stuff that is counterintuitive within the M and A process and there's certain things that are uncomfortable when you're talking about whether it's indemnities, warranties, escrows. There's a lot to learn in a very short space of time. So if a founder goes into a deal without advisors, this sort of alarm bells already start to ring and I try, we try to get certain things within the LOI whereby even a simple example in the LOI would be the founders non compete. There's no point in leaving the Non compete until 8 weeks, 11 weeks, 12 weeks into the process when you're starting to look at sign and close because their expectation might be oh we can sell the business and I'll just spin up again tomorrow. And when you tell them that you want a reasonable length of time for their non compete that can sometimes cause real deal friction at the wrong time in the deal. So there's certain things traditionally and as I've not got the corp debt background but there's certain things akin to that which I'll bring right forward into the LOI process and get that into the LOI because then you've done it early and a buyer will listen to you a lot more keenly when you're talking price initially than they will at the back end of the deal when they think it's nearly done. And they're sort of used to negotiating and that's used to how an SPA falls together and they've got everything and they're used to that more conflictual environment that comes around in that process. So if it's really important, get it locked down in the LOI because it will save you a lot of trials and tribulations further on in the process.

When you hire advisors, what areas of the deal you can obviously hire advisors for far above and beyond anything you need to do. What are the key areas that you retain advisors for.

We retain advisors so we may have an overreaching advisor that will have great experience of. We're a technology business and we buy technology companies. That's different to buying someone in manufacturing, food processing, whatever it might be. So it's important whoever advisers you get, you've got the people who know your market and in technology they understand recurring revenues and they know what the difference between a recurring revenue and a reoccurring revenue was because those have big impacts on valuations and what people are willing to pay. We will always bring in a tax advisor. We'll always get legal diligence from a tech perspective. We'll always check the open source technology to check they're not using anything they shouldn't be, anything they shouldn't be paying for. Those are the main areas. It really comes down to tax advice and legal. We obviously have our own firm of lawyers that we use who we've done several deals with. Now they know us, that helps. If you're doing a one off deal and it's a sole one off deal and you're never going to be buying again, I want to get the right team for one deal. But our strategy for the last five or six years has always been to have an ongoing corp dev. So any partners we bring in, we try and continue to work with because by the time they get around to second deal, the third deal, they know where our hotspots are, they know what is important to us and it makes for far less friction in the deal cycle.

You're still doing a good amount of this stuff in house. It sounds like.

Yeah, we still do a lot in house. We bring in an advisor, boutique investment bank to help us through the process. We'll bring in external parties, but everything else we do ourselves.

When you bring a boutique bank, you're bringing them in. Are you compensating with like deal fees like you do typically a banker or is it. Yeah, got it. What does it look like to scale up your corp team up and down as you do these deals?

The key to that is what you've just spoke about is the investment bank. The advisors providing they can scale whether we're doing one deal or five deals. Have they got the capacity to run those deals for us? And when I talk about running the deals, again, to be clear, this is really from loi through to close and the sweep up after that. This is not about the integration. We've had to hold back in the past because we had a period where we were very active and we bought four businesses within a relatively short space of time and we actually had to take our foot off the gas because we're a great believer in day one integrations. The business is integrated literally in real time. The day we buy the business, we meet the people and we integrate them into the teams. Our heat from the organization and the capacity of the organization was at a limit whereby we didn't want to break the business by being too aggressive from an M and A perspective. So at times we've had to stage our deals, we've had to pace ourselves so we didn't blow up in the process of buying too many businesses. If you're buying a business which is a run in terms of how much work needs to be done from an integration perspective, you've got to remember you've got a hard working group of loyal staff who are picking up the pieces. And that's what I said. This is not about the loi, this is not about day one. It's really what happens after that will determine success. And if you overheat that organization, your core business might be impacted and certainly your deal will be impacted if you haven't got the internal resources who can make that happen.

You know what's interesting is you source these deals, you get the process going and then you bring the bank in.

Yes, correct.

I don't hear that too often. Usually the banker is the one that finds you the deals.

And we're in a niche market, we sell technology to staffing businesses. It's a great business and it's a prospering market. And staffing businesses do an amazing job all over the world. Coming back to my point about having a 200, 250 target list, we know those companies, a lot of those companies are partners. We have an ecosystem. So we have Bullhorn Marketplace which is similar to the App Store, the Android Store, whereby a lot of our acquisitions come out of those adjacencies who are selling through the Bullhorn Marketplace. So we know the businesses. I take probably too many calls from third parties who claim they can bring value and they can find deals that we can't find or we don't know of that hasn't happened yet. I look forward to when it does, particularly probably when we're looking at a geo outside core geos. So us, uk, Europe, apac, our main regions that certain parts of Europe were well penetrated, certain we're not. So if somebody came along with an amazing company that we weren't familiar with in southern Europe that had a good share of their revenue come from staffing Technology. We'll be really interested yet for something unique to come in from the wings that we weren't aware of. All the deals we've done today have been self sourced.

So do you get a break on the deal fees when you bring the banker in?

I obviously couldn't comment on our financial relationship with the bankers. I believe in paying well for the job that you get done and if somebody isn't doing an upfront job and they're not sourcing deals, you take your pick. Do you think that'll be reflected in the price or not?

Fair enough. Let's get back in house. You're going through diligence and obviously you're pulling people in for some parts of the analysis. Like you said, you're pacing yourself so we're not overdoing or overextending ourselves on the resources we have. What does that look like as you move through these stages even, how do you go about knowing who to get.

Involved in the deal from an internal perspective?

Yes, internal.

I'm lucky because I've got a lot of institutional knowledge. We're a 1300 person business, so we've got 1300 people in the business. And I'm also CPO as part of my other duties. I know the business cross functionally, I know the business and that will really determine where to look. There aren't many people in our business who you could say, yeah, they could be a great vp. Corp dev, let's call that for the time of their own lead integration, whatever you want to call it. Within the group of senior management, there's various people who have expressed an interest to me who come forwards and say, this is really exciting what you're doing, or that was great, I'd like to be involved in the future. But again, it's that institutional knowledge. I can help them understand how corp dev works and what makes it successful day one and a successful integration. It's not like they have to sit with five miles of books and learn how to do M and A. The people around them teach them the science of M and A. It's really understanding what's best for the business. What is the thesis of the deal? Why are we doing this deal? What is the go to market strategy? What is the people strategy? How are we putting that together? No one better to do that than business leaders. I've worked with other models in the past, but it really does help. You could have the best corp dev person in the world who was leading the day one and the integration planning, but if they don't have that institutional knowledge and as important their cross functional voice because you're pulling lots of different functions together, whether that's sales, whether that's marketing, whether that's tech at a high level or whether it's R and D, all pieces have to pull together and work in unison. So again, that person who is dealing with those people on a day one basis, who is working on the cross functional plans leading up to the deal are critical. And probably the most important person of the deal, yes, there's someone who can get the deal done and buy the business. But again, this is the most important person because it's how that business is integrated. Now some companies park integrations and they'll leave it for 90 days or two years. They may even have an earn out where they've agreed they're not going to interfere with the business at all. Those sort of deals scare me and I have to question why. Unless you're going completely remote from what you're doing or you've just got a group of unassociated businesses. But if you are one business and you've got a headline proposition with multiple sub propositions underneath that and you buy your business, get them into that as soon as possible would be my advice.

Yeah, yeah.

There's always efficiencies in a deal. You obviously can't get efficiencies day one or day 90 unless you're willing to bring that business in and crystallize those efficiencies.

Sooner the better.

The sooner the better. Absolutely.

When you bring the business leader in, obviously you want to get good alignment with the deal, have them bought into it. But then are they the ones that in turn would pull in some of the functional resources to start doing diligence and even preparing or thinking about integration of the company?

Absolutely. Their job is then to engage with the cross functional leaders who will in turn have people in their teams at a senior level that they delegate down to to work on those cross functional sessions. Each function has to be dealt with completely independently and then brought together at a high level. But each function will have its own metrics, its own challenges, its own opportunities of bringing this business in. If we look at G and A, if we look at finance, if we look at hr, it's that sort of relatively business as usual. They just need to facilitate the business coming on board. They need to facilitate the process, the day one process, moving people to the new contracts. If they're moving, sharing news with people, if they are being orphaned and there's no future for them in the business. They're really critical at that point. But the most important people are the functional leaders. Because on day one it's really important that if you've got an R and D function that you've got the right person in R and D that's addressing those people and talking to those people and giving those people comfort about the future. All we've talked about today is buying businesses and corp dev and all of those things. But you've got to remember in all of this, whatever you're buying, you've got people involved. You're not buying pure ip. There are people involved in this. And even if those people have a really long path and a great future within your business, it creates uncertainty in their minds. It creates uncertainty. The most important thing is people in this is in an area you can get so obsessed in the numbers and the accretive and the thesis and the analysis and numbers everywhere. We have an amazing CFO who does an amazing job at that. And I've got very numeric board members. But we mustn't forget the people because whatever you're buying, it involves the people. And I've seen it go badly. And people have bought what looks like a great business. And not day one, but day 19, the people that they wanted to retain haven't been retained. A lot of that IP and that relationship and those client relationships have walked out the door. You have to question what did they actually buy? When you look at it at 90, 180 days and so much of that is about people and you got to remember people are human. People have feelings, they have families, they have commitments. And being bought by another business is incredibly unstabilizing in what's going on in the employees heads. So that's key to any deal, how you embrace those people, give their people the confidence that they have a great future, hopefully a better future moving forward, forwards. But equally put your arm around the people who aren't going to be required, whether that's in the short term or the medium term. And give them confidence, treat them as human beings and look after those people as well. Microsoft personally and the rest of the slt, we put a lot of thought and effort into how we treat people because it's all right saying there's deal, there's deal efficiencies, but behind deal efficiencies there's often people whose lives are being impacted. So how do you treat those people with respect? How do you help those people into their next journey? And we've used outsource advice and outplacement help, we try and help them from not just adhering to their contractual commitments to those employees. Some people, particularly in the US still shocked me. Being from the uk, contractual commitments over severance is normally very limited and if you are people are not part of the go forward vehicle, you can build into the deal costs maybe being a little more generous to those people than they would have expected. And that creates good grace, particularly in our market. I've mentioned we're in a niche market. It's amazing how many people that haven't been required by us going forward. They've been well looked after, they've been treated with respect, but they'll end up back in that same process with another company you're buying maybe six months, 12 months down the line. Because when you're fishing in that small pond of 200, 250 targets, the chances are there's people walking around between those businesses to get jobs. So we have to act with good grace and respect. And that's all equal to the founders and the sellers. Because reputation is easy to destroy. And it's important that you can shake someone's hand at the end of a deal, whether they're the seller, whether it's the advisors on the other side, whether it's the people involved, look them in the eye and they'll say thank you. Because you don't know where they're going to be on your next deal.

Absolutely.

It's amazing how many people crop up in our deals, whether that's advisors on the other side, legal people on the other side, or as I said, members of the team. We've had instances where we've bought a business, we've had to let go of some people and then the business we bought 12 months later, some of those people we let go with the other business are there, but they enter into those conversations because they've been well looked after and respected in the previous conversations. There's a certain level of trust there and I keep coming back to those words, trust and relationship to the people who are more financially astute, the guys that focus on the numbers, make sure you've got some people with some EQ around you. Not just because it's important you understand how people are going to feel, how people are going to respond. That applies to the deal cycle and.

Post deal cycle, treat people fairly. It all comes back to your reputation.

Yeah, absolutely. And reputation is key.

Peter, one thing that caught my attention, you mentioned cross functional teams. I wanted to understand that a little bit on the management side where you have your business Leader and it sounds like they assemble a cross functional team that then delegates things to each individual function. Can you explain that a little more?

Yeah. So when I talk cross functionally, hr, finance, it, marketing, sales, that's what I'm talking about. Cross functionally and a whole host of technology there. So each one of those functions rolls up to somebody on the slt. So the SLT senior leadership team, we're very close on when we do the deals. Let's say marketing as an example. Marketing will have been involved in the deal thesis, been very much involved in the process of are we going to buy this business? So we get that business under loi. Then the person who is responsible for marketing our CMO then read in. We have a quite detailed reading process in our business, something every business must do. People should be read in. People should be aware what being read in means. And Chinese whispers about deals shouldn't happen in a business. People either know or they don't know. So then in this instance Gordon, our cmo, he would read in two of his key people and those key people would meet with the lead person that's heading up the integration and they would talk about marketing and how that fits in to the overall deal. That would then be repeated with each of the delegates from each of the functions. So SLT close know what's going on. Then the SLT for each of the functions they're responsible for bring someone in who'll be part of that cross functional team. And this is a virtual cross functional team. We don't get together in meetings with 40 different people representing all the functions. This is a divide and conquer. Where your integration leads will work with each of the cross functional representatives to come up with a plan at a functional level. Those functional level plans will be driven to the deal metrics and then they'll be pulled together and that will create the Bullhorn integration plan.

Let's get into integration. How do you determine who's going to be the integration lead?

So integration lead would be picking the right person from the business. Now we've had a permanent VP corp dev. Historically when that deal flow started to slow down, Covid times hit. That was a sad time where we had to say goodbye to that person. So we're in a position now where we're bringing in these integration leads on a deal by deal basis. And it's about their knowledge, their understanding of our business, their understanding of the target business and who is the best person in our business to bring that together. We would always much rather take it as a development learning opportunity from a VP within our business because it's a great learning opportunity. Someone who is leading an integration on an acquisition. It's a great learning opportunity. It's a great opportunity to get real exposure and insight into how the business runs and real exposure and insight into working with the slt. That's normally a collaborative approach across the SLT whereby SLT members will say, I've got this person in my team and we're great at it. We may end up with three or four names that come through that process and then as a team we agree who we would like, who would be our preferred person to be heading up the integration. That person is then selected, then we go and talk to that person to check that they are interested. This is something that they would want to put their life on hold for three to six months, depending on how long it takes to get the deal done. Because you know as well as I, when you're in a deal process, it can be all consuming because there's a lot to get done. That really helps because you've got somebody who's fresh. Somebody, yes, they need somebody to steer them through and guide them, but they've got that enthusiasm and that deal enthusiasm where they don't mind their lives being disrupted over a period of time. And that gets even worse when you're doing complex multi geo region deals. We bought businesses in the past where there has been a usa, UK and an APAC side to the business and that's, that's sort of 24 hours worth of coverage on that. Which means you've got to be pretty flexible when it comes to your diary and taking meetings to get the right people on the phone at the right time.

I like how you coined it a learning experience almost like executive training.

It's not an mba, but it's real and it's real life. And particularly if the person, the VP you're picking is probably VP of X. But they need to then, I said work cross functionally. So they need to then build up a really good understanding of how the other functions operate and how that works. And genuinely it is a learning experience for those people and you've got to have people who want to learn. You've got to have people who want to learn, who want to put themselves out there and take a risk because it's high profile as well. It is a high profile role within the business when you're making an acquisition. And if you've got somebody who doesn't want to take that opportunity and sees as a negative, they're not the right person for the job.

What's your integration process look like?

Integration process is deeply planned. We start day one planning about. Well, as soon as we get under loi, we start day one planning. Day one planning. As I said, our main plan goes all the way through probably 90 days is where we plan it intimately. The first thing we plan is the people keep coming back to that. But that's important. There'll be a thesis, there'll be a model that's been created by the deal team and then it's okay, how do we apply this model? How do we get to this model? So that planning starts day one and we involve seller in that planning as well. Whether it's. That's down to day one announcements. How are we going to communicate? Where are we going to communicate? Is it Covid times? Can you bring the whole company together anymore? Depending on which region it is and how it works. So yeah, that starts early doors. So when you are coming to the ends of the process, as in the buying process, you're moving towards sign and close. Everyone is pretty confident that they know what's happening, they know who's got to be where, who's responsible for what. Branding. We tend to have a branding ethos whereby we bring the company on board. We have a process which takes them to a full Bullhorn product offering. But initially it's company XYZ buy Bullhorn. But that will be day one. It's important that the new employees have an email address on day one, a bullhorn email address on day one. It's important they have access to our infrastructure on day one. If they're a Microsoft shop, we're a Google shop. How are we going to do that? How are we going to train those people? How are we going to tell people what happens next? Those first few days of planning are literally minute by minute. Who's talking to who? Where are they talking? How's that group announcement happening then? It gets a little less micro by the minute. But the first month there's a lot of activity that goes on and the people who are responsible from a bullhorn side, they've obviously got to make sure their own house is in order, their core business, because they're probably not really focusing on their core business while they're focusing on the acquisition. So there's a whole trickle down effect. And I mentioned earlier about deal fatigue within the business. It's important that you understand as a senior executive in a business that if you are going day one or you are going integration, that this is going to have an impact on your business. And if you don't have capacity in your business to do this, seriously question why you want to do the deal. Unless you're buying a business, you're giving them a two year earn out and you're saying carry on, just report to us on a monthly basis. We've tried it always, but we do a day one integration, as you've probably gathered by my dialogue.

So I mean your approach is integrate as fast as you can.

Absolutely, absolutely. Whatever the ultimate goals are, the sooner you get to those. And that's not just about efficiencies, that's about what was the strategic goal about why you were trying to buy that business. Were you bringing in products? Were you bringing in new products? You bring in new products so you can put it in the hands of your sales team to sell. Why do you want to wait 12, 18 months for that to happen? If you're buying something that you can add to your SKUs to sell, you want that to happen as soon as possible. Don't waste any time. Speed is really important here because if it's a month, six months, if you can accelerate things, that has a big impact, particularly in the world of private equity whereby it's all about the multiples and the sooner you can get to those and the sooner they're in the rearview mirror rather than in the forward mirror. And again, you and I have talked in the past about valuations of businesses and particularly it used to be historic ebit and turnover that were important. But more and more it's about what a business is going to do in the future determines its ultimate valuation.

What are some of the biggest lessons learned in these past seven, eight acquisitions?

I think hopefully my dialogue will have probably brought that out. I was very strong about the people. Did we get that right in the early days? Did make some missteps which we could go back, we'll do them again. Valuing the people. I think the one thing that we have now, I might sound very natural, but the relationship between legal HR finance and corp dev because everything else picks up from a cross functional perspective. But those are the four dynamics where the rubber meets the road on a deal. You've got to have our CFO is key to our deals and you've got to have a CFO that really cares about this and wants to be involved and knows what's happening in the deal. I think where I see it go wrong is where corp dev is an island, where corp dev is corp dev by the businesses. It's Team sport. If we do a deal, people congratulate me and I'm always first saying, this is not corp dev without legal, without finance, without hr and then the support of all the cross functional groups underneath that we look at team sports Olympics is coming up. You've got lots of sprinters, you've got lots of people who are specializing in their core events, but they all wind up into Team USA or Team uk and that's where it becomes really important and that's the difference between success and failure. Yes, you can be Usain Bolt and be the best sprinter in the world, but he's part of the Jamaican team and he runs in the relays and he's captain of the Jamaican team and he takes responsibility for all of those. You've got to have that mentality. And again, that comes back down to people. As you can see, people is a reoccurring theme that unless you've got team harmony and you've seen when deal. I'm sure you run shows and programs on what happens when a deal goes wrong and people talking about deals going wrong. And if you have got that those four groups, Cordev, hr, Finance and Legal working together, you're minimizing. Everything that we do is based on micro improvements, getting those extra bits right. How can you add value to deal? How can you make sure it doesn't go astray? How can you minimize your deal costs? How can you maximize your E bid at the other end? And unless you've got this complete team ethos of people working together and seeing team success, you will drop the balls. You might not fail, but it might cost you three or four points at the other end. And those three or four points at the other end can be worth tens, if not hundreds of millions of dollars. When you come to look at your exit, when you come to work out why you've done the thing and again know why you're doing the deal. So I know I've gone back to the start, but you've got to know why you do it. You can't just be doing a deal because your private equity company or your VC house says you need to start some acquisitions. You've got to know why you're doing it and what's the impact going to be. And not just spreadsheets, not just numbers.

I like it. People. Focus, team and the why. Peter, what's the craziest thing you've seen in M and A?

I've had some crazy relationships in buying businesses which would probably be inappropriate to talk about, but people do Stupid things under pressure and that results in really strange behavior. People get aggressive in a heartbeat. People go from placid, nice conversation like you are having now, and when it becomes personal, when they become nervous or when they think the deal might not happen, or everyone always thinks there's somebody with hidden agendas in a deal and that can invoke some very audacious aggressive behavior. I'm fortunate, I'm relatively calm and I haven't had any situations I can't deal with. But people's behavior in a deal is one. And the other thing see is the price is the people have paid for businesses which you now look at failed and you now see them three, four years on. And when you speak to the people involved, how did that go? Yeah, it didn't really work out. And you think that's no great surprise. We looked at the company once, we were looking at valuing 5 million and it wasn't. We tend to look at a threshold of size in terms of when something becomes attractive to us. We look at five. We may have been able to stretch an argument to 10 if it was a majorly strategic thing for us. It wasn't. They ended up trading at nearly 40 million in the same period of time the company bought them, completely overpaid for them and they should no way have paid that amount of money. Now as a seller, happy, give me your money. But if they look at their outcomes now on that deal, I doubt they can actually have anything that points to it was successful in any way of their initial deal target. So I think if you ask you one question, it would be paying very large amounts of money for a business that had no real worth. And they got caught in the thrill of the chase. And exactly as I said, they were told they had to do a deal. We've got to do deals. And they rounded on something that was a bright shiny object but had no real value underneath it.

Wow. Overpaying and blowing up.

Yeah. Couldn't really get much worse. What's the crazy story you see?

Oh, I've seen. We did a happy hour one time that was just about crazy stories. There was stuff where people are doing diligence and finding out like the organization was funding terrorism. There's some really interesting stuff that came out.

If you're doing a founder led purchase or you're buying a founder led business, you often see what would classify as personal bills coming into the business, whether that's house cleaning, car validing, a lot of. Particularly if somebody's evolved a business from a small business. The difference between a personal bank account, a business bank account didn't exist. And as it's grown, that sort of never stopped. So, yeah, you definitely see some interesting incidents of, let's call them. There wouldn't be recurring costs when the deal is signed because they'll have to go back being paid from somebody's personal bank account rather than the business bank account.

Can't remember what city. Maybe it was D.C. i met a guy at a bar. His whole career was being essentially the CFO of US embassies in various countries. And that was interesting when he had stories of what was getting expensed and interesting things because it's all different cultures, different ways of doing business. And remember, I think one was somebody expensed two goats in the Middle east because that was a customary thing to meeting with some goats.

Yeah. But under the Bribery and Corruptions act, that would definitely not be permissible anymore. Whether it's goats or goat's milk. Culturally there is difference. We haven't spoken about it here, but there is definitely a cultural difference between buying a business in the US buying a business in the uk, buying a business in mainland Europe and then when you've got Europe, huge cultural differences between all the countries in Europe and then down in apac. So you've got to know your audience and you've got to speak the language your audience speaks. Because, say, buying a business in the US is not the same as buying a business in the Netherlands. And yes, there is a formal process, but there's so many differences between the two.

That's a whole interview we could pick up.

Absolutely.

Actually, it'd be a fun roundtable.

International deal nuances. Yeah, absolutely. It would. Definitely.

Awesome. Peter, thank you so much for your time today. I appreciate it.

It's a real pleasure. Looking forward to seeing the podcast and talk to you again in the future.

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