Managing Sourcing, Diligence, and Integration

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All right, hello everyone, I'm Julia Rollins. I'm on our client Success team at Deal Room and I'm here to introduce our final session today before our happy.

Hour Managing M and A Sourcing, Diligence and Integration, a discussion on best practices and tips. This session features Aaron Whiting, Director of Strategic Programs at Continuum Cloud and Sabih Khan, Director of Corporate Strategy and Development at Synity M and a scientist, Kisan Patel will also be moderating this discussion. I'll hand it over to you all.

Thanks Julia. I'm Kisan Patel, CEO and founder of M&A Science. Today we're going to talk about tips and best practices to managing M and A. Maybe if we can kick things off with just a brief on your M and A experience.

I got my start with a software company going back to 2014. I got my first taste of M and A and integration as a functional lead. So I tried to experience integration from any angle in the company that I could possibly get my hands on. A lot of that was client care, focus, so support services, but really just jumping in wherever I possibly could. Maybe two years ago, a little more than two years ago, I moved to a fintech company and started leading the integrations and that's when I really got hooked. I led somewhere in the middle of 10 and 15 there depending on how we're to measure, and then have recently moved to Continuum Cloud Strategic programs role, which is, if you've never tried it, one of the coolest jobs you can possibly do. I came on to run the initial merger for two great companies that were coming together under that Continuum Cloud heading. So I've been running that but also strategic programs Allows me a little bit more bandwidth to get into areas that maybe best practices either weren't there or didn't match. So it gives me the opportunity to help those functions build up into a standard that we can then integrate into later. So that's my M and A background. I drift as far back into the deal side as I possibly can, but am definitely a post close guy. So I need guys like Civie on the other side of the coin there.

Got my start doing MA working for a software company based out of Fort Worth, Texas. Moved on to a company based out of Virginia for about a year and a half, two years and now I am with Cinnadi as a director of corporate strategy development. Completed about 10 plus deals. Now we're in the middle of one at the moment so things are pretty interesting. I've done some cross border deals in Europe as well as in New Zealand, so I've got some exposure there as well. And most of actually almost all of my deal experience has been working with software or technology based companies.

Do you want to kick things off with maybe talking a little bit about your process in terms of process must haves and what do you bend on?

I was lucky enough to catch some of Chris's last bit there. I love the slide with five bars there all around alignment. It's an area when we think about things like the knowledge chasm or the alignment gap that can be created that's critical. We talk about critical process. That's one that I draw a huge circle around. Is getting that alignment pretty close. I don't claim that is an easy thing to do. I would claim that it's easier to do than some make it appear. But I do think you need a great partner on the other side like a Seville or another corp dev guy to really help set you up for success there. If we think about where integration would typically overlap most heavily with the corp dev side pre close it's really their pre diligence diligence and loi and I pick up heavy during diligence. But really as we come out of diligence, the formal diligence, that's when I'm picking up speed and we're starting to shift from a subie handling that relationship to me. So that's really where I need that good handoff to come from. Without a proper setup I'm toast. So with a proper setup coming out of diligence, it frees me up to have those alignment conversations that I think Chris was getting to there. It's difficult. I'm glad to have guys like Sabiha on the other side who can start setting up those relationships and be as transparent as possible. There are some instances where some of that is a little bit more difficult, depending on what the thesis is, et cetera. But getting to clarity pre close is absolutely critical because everything rolls off of that. So setting up some of those meetings where it almost feels too scripted, sitting down and really walking through, okay, here's what the next hundred days look like. Here's what we've done to date. Here's the plan really mapping out. I think Chris called it a roadmap. But it's really just what are the big milestones? What's it going to feel like? How are we going to handle the staff that are there already? What's the communication plan going to be? And getting that too clear over striving for clarity and making sure. Don't assume that everybody understands what this is going to be like. It may be their first time through and they've got preconceived notions about how long this takes. Are we independently operating? Are we not independently operating? Making that awfully clear so that everybody starts on the same page.

That's my number one, a big emphasis on knowledge transfer.

Making sure there's some continuity of information as you shift from diligence to integration.

Knowledge transfer, yes. I think about knowledge transfer in two ways. If you are in a situation where for some reason you're diligence team gets separated from your integration team at the functional leads that are already embedded within the companies, they have to have a really detailed plan about how do they close that gap without reinventing diligence. The ideal is that you don't have to run through that process because you ensured that you have the right people engaged in diligence to begin with. And I think when we talk about that knowledge chasm, it's something that we do to ourselves by separating those two things for some reason and creating the necessity for a handoff of all this information, which by the way, you can never hand off cleanly. So the best way to do that is by having the right people engaged to begin with and using the people who are going to end up with the company in the end to really drive that line of questioning so they can consume the information that comes out of the soon to be acquired company.

How would you vision the ideal approach of when you get involved as an integration lead?

My best answer is as soon as possible. Usually involved in the pipelining as well. So I know what's out there, even if it's way out there. If that's not possible for some reason, bandwidth constraints, whatever it might be, as soon as AN LOI goes out, that's where I really need to be there. I've seen it displayed in a couple of different ways and you've probably got it in your handbook or soon to be other handbooks of these parallel tracks which I don't feel like tells the full story. Parallel tracks to me still feels separate to me. At loi, a subby and a ME are working very closely together where Sabi might be out in front and I'm supporting behind and we just kind of shift up and it never gets to 100 0. It gets to a 70 30. While SEBI is supporting through an integration and being there for maybe historical context. Absolutely loi I gotta be there even if for some reason I fell asleep during the pipelining phase from the front end.

And speaking from the part before we get to that, obviously I think what Aaron hit upon is really critical is making sure that knowledge transfer happens and figuring out when you're going to do that as well is a difficult decision at times. I'll get to that in a second. But I would say starting really early on some process must haves are just making sure that you've got regularly scheduled internal meetings, external meetings with stakeholders, making sure that you're very clear with your communic. I've got standing with the call that I have with the seller and the advisor just to talk through any sort of roadblocks. Right. Making sure that we are on target in terms of timing, making sure that we are able to just hit upon very high level all the things that we need to take care of in order for us to be able to close on time. And I think internally one of the kind of the key must haves is you got to have a weekly kind of leader meeting if you will, with the owners of all of your various work streams getting together, not necessarily going through the detail of every little thing, but just hitting upon, hey, what are the major red flags? What are the things that we need to take care of prior to closing? And so for me those two standing kind of weekly calls are really critical. And the objective also is to keep those fairly brief. You don't want them to drag on. So I try to keep the external call with 30 minutes or less, the internal call maybe an hour because you've got so many different folks involved. But that to me is one of the most critical things that. And there's some other documentation as well that I'D like to have. But for me, that focuses in on. As you're building a process from the ground up, you want to make sure that you're consistent in how you are going through that and make sure that it's a repeatable process. And so one of the things that I do to facilitate that is create a definitions document. If you're talking about pipeline and you talk about the various phases that a deal goes through, being very explicit, very clear from the get go when something moves or what the trigger is to move from one stage to the next and make sure that it's all kind of codified and written down so that if there are any questions later on that you are consistent in applying labels, that you're consistent in your organization, that you're consistent in your communication. There's so many moving parts when you're talking about M and A that you really have to have a consistent, repeatable process in place. Anything that can help you do that. For me, it's documentation.

That's a really good point. It almost sounds like you're basically building like an operating model that defines hires, companies approaching M and A and the thinking behind it.

Almost absolutely. It's a great way to put it. It's your guidebook, right? That's like what you are going to refer to. Anytime there's any sort of questions, anytime there's a disagreement between you and a certain team about any sort of topic, you can always refer back to that almost like a manual, like an employee handbook for M and A where it's okay, this is the, this is what we're going to follow. This is the cheat sheet. And you obviously want to make improvements to that as time goes on. Every time you go through a deal, when you do postmortem trying to figure out what went right or wrong, you would make changes. But having that documentation in place I think is a huge help.

Is that something you do?

Aaron or I have operated out of a playbook like a full kind of instruction manual. There are certain pieces that I'll lean on more heavily and some of that is ownership. Use some tools over heavy documentation to establish ownership. And I think that's an area where you can see some disasters ensue. Think about what Sabih is doing. There could be a tendency for that group that he's pulling together to fall into a pattern of Sabiha got that? He's doing the diligence, he's collecting all the information. He's just going to tell us when it's done. That's the chasm forming. Because the next thought behind that is, okay, we've got all the diligence. What's the plan? Subb Right? Or what's the plan? Aaron? I try to take the approach that A subi and myself, the two least important people in that process. We're really just a tool for the company to collect the diligence and to really codify. I think Sabib called it the plan. But really just working for the smarter people in the company and that trickles all the way down through go to market and all that. That's really where I focus is some of the tools. Rather than having somebody go through and read a manual because I know where that goes. Having it is good to go back and refer to, hey, here's what we talked about last time. I'll rely on snippets as tools rather than a full kind of distribution of a handbook.

What about people you pull in that may be brand new to M and A? I feel like it would be nice to have a briefing like Sabi described to get somebody up to speed about how our company thinks about M and A and the approach we take. Where I feel like your approach may make a little bit more sense if somebody's already got a rhythm down.

Yeah, I could take that. The there's so much that goes into it from an integration perspective that when you're standing that up or you have new functional leaders that are going to be engaged in this, given the whole thing, I think it's hard to digest. What I tend to lean on more is the objectives. Anybody who shows up on our doorstep is a professional. You have to assume that. So if you can give them some of the operating principles of here's how we do it, here's how we think about it. Maybe not step by step. Here's how we think about it and here are the objectives. Here's what it should look like in the end and then with nothing else, a professional should be able to think their way through some of the smaller details there. So rather than overload up front, I'll give some of the concepts, maybe not heavily documented, but I'll present those concepts in a way that's easily consumable and then start feeding. Additionally, as we build that muscle, to.

Add a little moment of vulnerability here. What part of the process haven't you gotten right yet?

That varies depending on where you are of the company in terms of experience with M and A. Every time I go to a new company and essentially start over, I think every company has their own gaps in kind of the M and A process. And so when you're building something from the ground up, it seems like there's a lot that you haven't gotten. And then there's other places where you've been to where they're very experienced with M and A. They've done tons of deals, they've got a team in place that is consistently involved with both due diligence as well as integration. And then you have very different kind of things that you don't get right. I think that one of the areas that we are probably struggling with a little bit at the moment right now is getting those processes in place for the integration and the handoff between the front end of the deal from diligence and the back end of the deal, which is for post acquisition integration. So I think that's one of the areas that we could certainly improve upon. And trying to find the right time to make that transition as well can be challenging when you're working on the front of the deal. There's so many moving parts and a deal could really fall apart realistically at any time. And so you also don't want to get the integration folks involved too early and waste their time because they've got a day job as well. And ideally you have some sort of overlap between the diligence team and the integration. But if you don't, then you've got to be able to figure out what that trigger point is and when you're going to read them in to the transaction, give them the background, why we're doing the deal, what the value creation drivers are, and what's going to be critical in terms of the day one activities to ensure that smooth transition. So finding that the right time to begin the handoff I think is challenging for sure.

Aaron?

Yeah, almost the same. I have an internal battle and I fight with myself all the time around the integration kickoff. Ideally, I don't want to have to run an integration kickoff because all of the individuals, professionals who are going to be running that integration in deals of the size that I typically work with should have already been engaged earlier on. If I have to run a separate brand new team integration kickoff, it means that we just created that chasm and now we're transferring knowledge over. We're teaching them about the thesis and what's the point? I have an integration kickoff play that I run. Every time I do, I feel a little dirty about it because it means I didn't get the guys in early enough and now we've created that gap so solving for that is something that I haven't fully gotten comfortable with because as we mentioned, the timing and especially the level of professional that you may be working with, you may not be able to pull them fully into diligence or pre close because you could be through one channel or another putting that deal at risk. I'd rather have a kickoff meeting with a brand new team, then put that deal at risk. But every time I do it, it eats at me a little bit.

I can tell you on the front end, we're certainly not trying to make your life that difficult.

That's definitely a tough one to crack. How do you ensure alignment with the target company? Post close.

A lot of those conversations have to happen early on during the diligence phase, actually when you're negotiating, I think the purchase agreement, that's when you start to align certain incentives to make sure that the acquired company is going to be focusing on the right things on a go forward basis. It's hard to have those strategy sessions I, I think more so post close. But you want to lay the groundwork for those discussions earlier on. There is a lot of conversation, a lot of back and forth that happens when you're talking about the deal thesis. And sometimes you can't necessarily obviously reveal all of that information on the front end and prior to closing, depending on the type of acquisition, depending on the circumstances, every deal is so different. But the more that you can do on the front end to clarify what the go to market strategy is going to be going forward, what the personnel plan is going to be, what's the timing of any sort of cost synergies that we're going to be focusing on, both from an operational perspective, I think, as well as from a technological perspective, you have to have those conversations super early on in the diligence phase. So that as you approach the end and as you approach that handoff to integration and you're crafting the communication documents, you're not negotiating or having those difficult conversations while you're in the middle of drafting an FAQ document for employees or anything like that. You want to make sure that, that the base clear. I also want to say that being the buyer in that situation gives you a little bit more leverage because at the end of the day, like you're acquiring this company, it's going to be your business. Certainly I think if you're planning on keeping the leadership team in place, they need to be involved. So you have a little bit of leverage there. But it still has to be a pretty collaborative process.

Kizan I hit that right at the top. That's my must have and Savvy's got the harder job there. This is maybe the one time that civill's got the harder job when it comes to work integration. But that conversation is as he mentioned, it's really an evolution and there's some stuff that maybe he can't pull out up front as early as he would want to otherwise. So as that conversation evolves as we get to that handoff pre close to ensure that there's alignment there, that's where I'm working with Sabi to really punctuate and clarify that messaging so that pre close and immediately after close we know that everybody is battling the same direction. Hopefully those tough conversations have been minimized just through Sabib's work. But if they haven't been, that's where we come together and really draw clear boxes around all the go forward plans.

Transparency really get the thinking about what integration is actually going to entail and evolve early so that there's clarity on it sooner than later and no big dramatic surprises.

Yeah, just to add on that, I think if there are certain costs in the purchase agreement that talk about some of those things of retaining key employees, things like that, I think that helps in making sure that objectives are aligned. Certainly I don't think you're going to put anything in regards to go to market strategy or anything like that and the purchase agreement. But the key there is understand the motivations of the seller, like why are they selling this business? Was it a lifestyle business? Are their employees important to them? And then making sure that whatever plans that you have for the business are aligned with that as well. And having again, if there's difficult conversations that need to be had then I think start to have them a little bit early on, at least set the stage for them and then you start to have them the ones that could potentially blow up a deal. I think those conversations you have post close as opposed to prior an example of something like that from a personnel perspective, if the seller is motivated and wants to make sure that all of their employees for example, are taken care of, that all those sales folks are going to be cared for and you've got or even their technology, their developers and you've got plans to sunset their platform or you're planning on phasing it out and let's say you're taking a competitor for instance, then maybe you don't necessarily have that conversation prior to closing in terms of what your plans are for the developers or what your plans are for their platform. Those are things where you would say, well, we're going to post acquisition. We're going to take a close look at both product sets and figure out which product makes more sense for our target markets and what our business strategy is. You kind of lay the groundwork beforehand and just let them know that it could be either or it could be their platform or it could be yours that ends up getting retired. But I think that if product employees for example, are really critical to them, then you don't have those real meaty conversations around those post acquisition, post post.

That's a good example to really try to be as transparent as possible. But at times there is sensitivity where you gotta make a tough call.

Absolutely.

How do we ensure team alignment during diligence?

You start with obviously a kickoff meeting. I like to have a diligence kickoff meeting very early on as soon as we get the LOI signed and we're getting ready to start off within like the next 24 to 48 hours. Get a kind of an all hands call. Everybody that's going to be involved from all the various work streams, give them the information on the deal, why we're looking at it, why it makes sense. What are some of the critical things that we're going to have to focus on? Again mentioning the value creation drivers like is it a platform consolidation play, is it a roll up, is that do they have some additional functionality or is it an acqui hire where you're bringing on employees? What are the key things that we need to be focused on as we go through diligence? And then you put together your diligence request list and prioritize the ones that are most important. Make sure that each one of the work streams are focused in and keyed in on the things that are most critical for their work stream to help focus and drive the conversation a little bit and identifying key issues, questions, risks that they need to keep an eye out for as they dig into the data room, as they go through the material. And then what I alluded to earlier with the weekly check in calls, I like to have one kind of high level with the workstream owners every week to make sure that any sort of cross functional or cross work stream items are being addressed. You don't want your operations team operating in a silo from your finance team and next thing you know there is some sort of back end billing issue that nobody had planned for or operations thought. Finance is going to take care of it, finance operations is going to take care of it. And then you've got a big message in here. Definitely want to have those weekly leadership calls. Also, depending on the size of your diligence team, you may also want to have smaller or maybe not smaller in the sense of time, but definitely have separate calls for each one of your individual worksheets. So a finance call, a tech call, a go to market call, et cetera. I think that that is a really great way to make sure that everything's being communicated regularly with folks internally as you go through diligence every week I'm pushing my team to update the tracker, make sure that folks are marking things off as complete. That is a signal to the seller that you're engaged and that the team is working through everything. And at the same time I think it does a really good job of making sure that nothing seems to the cracks that folks are engaged all the way through on your team as well because they know that every time they come in for a weekly check in call they're going to have to show some progress. The tracker helps facilitate that conversation. I would imagine. It's probably very similar to project plan post acquisition.

Yeah, it's almost carbon copy. I didn't invent it, just stole it from people smarter than myself. But it's the weekly functional check ins and then we all come together scaled agile style, usually on Fridays to make sure the cross functional piece is there. So if you have that process in place during diligence, if you have that handoff in the middle, which ideally that handoff is as organic as it can be rather than a start stop feel, it should just flow right through the whole next 90 to 100 days after that close and it becomes more of a process less than, you know, singular string of events.

We talked a little bit about when integration gets involved. I think Aaron, you basically came to conclude that as soon as LOI gets.

Signed, I watched the pipeline but then Loi, I'm right behind subby supporting there, however he needs it so that we keep those parallel tracks. That's my preference. But again earlier is better almost in all cases.

A good rule of thumb is at least a few weeks before closing. You don't want any sort of surprises. It depends again on the timeline of the deal. If you're deal timeline is 30 days or less then you don't really have much of a window. Maybe one of the ways to get around that is to constantly have a relationship with folks. On the integration side. We're kicking off diligence. Can't share too much with you right now. We may have another project for you coming up next month, something like that. And then obviously once you actually are in the middle of diligence, ideally those integration folks are involved with diligence, so it is a clean handoff. And again, as Aaron said, you don't have to have a separate integration kick off all the but again, in the event that you do, you want to do that sooner rather than later. So I would say at the absolute latest, maybe like three weeks before close would be in my head, my internal deadline where I got to start involving some folks and letting them know what's coming.

What are the do's and don'ts of managing communication?

How long do we have?

40 minutes.

So big do for me, obviously I probably said it several times already is clarity and really underlining. Don't make assumptions that people know what the plan is or that somebody else has already shared with them. There's power in repetition, there's power in the casting. Right. So we've already talked about aligning with the leadership level. It should be the same message every single time as you cascade down through that organization. That message should tie out to what you share with the customers. It should tie out to what you share with the partners internally, with the employees of the acquiring company as well as the employees of a company that's coming into the family. So consistency, clarity, there's probably another C we could throw in there, but just being super crisp with all of that messaging so that there's no little threads to pull at and you don't create that confusion. There's enough confusion as it is or the potential for confusion.

You got to make sure that your communication plan is consistent again with your deal thesis that the seller is clear on what's going to be communicated to the customers, to the employees that are being acquired. And you also want to make sure that you are communicating appropriately again to your own employees as well as the big do for me in terms of the day to day management of the team is I try to start off every week or every conversation that I have. I just bring them up to speed on every little thing that happened in the last week and kind of where we are today. And then I hand it off to the workstream owners to say now go ahead and fill us in on where we are with diligence. What are the risks that you discovered that sort of thing. I don't necessarily go into the details of the IT team found xyz, but I'll say the IT team went through diligence. They identified a number of risks that we need to discuss. We had a legal diligence call, we started drafting the stock purchase agreement, et cetera. So folks are aware of more than just their siloed functional area in terms of like where we are with the deal overall, where we are within the timeline so that they can better manage and fill out their calendars over the coming weeks as well if they know that they're going to be crunched or they're going to have a task with a dependency that they need to be able to manage their schedules according to. So for me, that's huge. Starting off every meeting as if nobody's in the loop and just filling in for the first time in a week.

Can we talk about go to market strategy? When does that thinking come in place?

Super early on. That's a part of diligence. If you don't have a go to market strategy, you have no business closing, in my opinion. Some people fall into that trap of figuring it out after the fact. But I think you've got to at least have an idea in your head before you close. In terms of how are you going to price this new product that you're acquiring? Or are you going to pursue a direct sales model or an indirect sales model? What are the cost structures associated with that? All of that is a key part of the valuation model that Corp Dev is building that really I think can make or break a deal. And it's okay to be in a position where you're not entirely sure of maybe the nitty gritty details, but you at least need to be able to identify what are the key things that we're going to have to figure out post close the plan is to move forward. If you're acquiring another platform, maybe that's direct competitor of one of your platforms. Okay, great. Post acquisition we're going to have to have a strategy session. We have to figure out which one has the better brand recognition, what specific market segments are they targeting, and if you have the framework of the plan set in place, then those conversations post acquisition get to be a lot easier because then you can quickly make those calls within the first 30 days and start to execute against it. I think if you walk in thinking we're not really sure we'll figure out what we're going to do post acquisition, that's messy and more than likely you're going to miss your targets and it's not going to be a successful acquisition.

It's also where the company that's new to the family starts getting hip to the fact that you don't have a plan and your communication starts falling apart there. A mistake that can be made is mistaking a thesis for a go to market strategy. The thesis is great as an initial kind of conversation driver, but that go to market needs to get to the next level. And I think that's also a place where super clear ownership comes into in my world and probably Sabi's world as well. That's product, right? Sabi can lead with a thesis. Hey, this is interesting because that product team needs to be smarter than the both of us and really put together that framework. That framework drives everything else that I do post close and it should drive synergy planning. It should drive to Sabine's point, that model build that we're going to put together. So without that go to market with Toast it takes forever to get through some of that stuff post close. It can be a relatively painless process if you do it pre close sounds.

Like you live through it.

Can neither confirm nor deny.

How do you make sure that you have an executable go to market strategy on day two?

It's really demonstrating that framework. There are some key pieces there. It's how does the product fit into the portfolio? Are we growing it? Are we holding it?

Are we.

I can't do it. I'm not a product guy. But for the right professional in that product role, it should be a fairly simple exercise based on some of the findings that Sebi brings forward. Beyond that, some of the modeling that Sabi does is going to drive most of that as well. But just that framework gets me to enablement or clear kind of actionable go to market activities by day two, ideally by that Monday after close.

I guess for you, Sabibi, when we think about this handoff to integration team, when are you done? When are you first really out of here? Is the right one closed and you have your closing party and you disappear on to the next one.

It can obviously vary depending on the transaction, but my job is at least in the front end of corp dev is to obviously oversee diligence. But I still stay pretty involved, especially in the immediate aftermath of an acquisition, to make sure that there is that knowledge transfer to facilitate any difficult conversation that we need to have with a seller who is now a member of your organization to get those roadblocks out of the way so the integration team can go out and execute. And I think that my role shifts a little bit in the front end. A good way to describe it is you're actually a project manager and then on the back end, once it shifts into the integration phase, you're more of a program and so your job is to make sure that the high level decisions are being made in a timely manner that the integration team can just go out and essentially execute. And I'll stay involved. I probably at most for about a year kind of post close. My goal is to be completely done and out of there within a year of post acquisition. Obviously that timeline can vary and as that year goes on, I'm probably less and less involved and probably more heavily involved kind of post acquisition and for two to three months at most. And then I start to fade out a little bit as the day to day integration process is continuing because it doesn't really require as much of my input. That knowledge transfer is already kind of large to complete.

What keeps you on the hook in.

Terms of what keeps you on the hook later?

Yeah, keeps you incentivized to stay on.

And just being a member of the team and just the fact that I'm going to be held accountable for it. If the integration goes poorly, chances are folks going to look at that acquisition as having been executed poorly. I look at it as even though I may not be directly responsible for it, it is still a reflection on me because I was responsible for making sure that the integration team could do their job effectively. And obviously the success of the company means that it's good for all of us. It's just a personal statement. I definitely look at it as this is just as much my responsibility. I'm a member of the team and I'm not here to make Aaron's job more difficult. And if the two of us are gelling, if we've got great communication, if the project's running smoothly, then chances are that both of us are going to be looked upon favorably, I think by leadership.

We got a handful of questions before we hit the hour here. How about day one do's and don'ts?

Day one do's and don'ts. Definitely have a plan prior to day one. So definitely don't walk into day one thinking, okay, now that the deal is closed, we're going to put together the project plan. We're going to put together all of that. I think that's got to happen prior to close. And I would say don't necessarily make large organization changing decisions on day one. So if there is a plan to reduce headcount, for instance, that's not something that I necessarily want to do immediately post close. I think one of the first things that I like to do is make sure that the new employees are being welcomed, that they feel a part of the new organization, that they know that we're all going to be there to support them. There is a lot of fear, I think, certainly, and I think some of the HR folks would probably attest to this. There's a lot of uncertainty, not just actually from employees, but also from customers as well. They don't know what the plan is going forward. The key is to have a good communication plan in place for both internal and external stakeholders. And I would focus on the cultural kind of integration issues on day one and then kind of start your technical integration whenever I think that it makes sense for the deal.

Yeah, I'll say the same but a little different. Just reduce uncertainty on day one in whatever form that takes. Also seems small, but it's not. The biggest hero on day one can be your internal IT guy or gal just for setting up those email addresses. We find ourselves in situations where we may get into a spot where we're trying to bring in new employees and having to have that awful conversation of what's your availability Tuesday? If I can see somebody's calendar on day one, that greases the skids for us. Just reducing that uncertainty. That IT enablement can really go quite a ways there.

Really good points. Give us your best advice. Got an audience of folks that are either managing deals for the first time involved in various parts corruptive integration. I like it that you guys have a lot of this experience fresh in mind, have gone got your battle wounds and things like that. But what are some of the real key lessons that stick out to you that you think people should keep top of mind or could learn from you?

Go fast. Go fast. You should get to a point where you're going so fast that it feels reckless. At that point you're almost fast enough. That doesn't erase any of what we've talked about before. Some of the best practices around not creating confusion, you still need that clarity, but you need to create that clarity fast. The longer you leave it sit off on a shelf, the more you can get confusion percolating up and cultures don't gel. Whatever you're going to do, go fast. And that includes try to be done with anything you possibly can be done with before day one even hits.

Wow.

Yeah. I would say again, go fast. I think makes a lot of sense, but definitely don't delay or postpone or procrastinate in any way. If you've got from a diligence perspective and got things to look at, dig in as soon as you can and then I think the other thing is make sure that everybody is engaged and is consistently engaged. So if you are sending messages or you're assuming particular work stream is handling their business and they're capable and everything's going smoothly, I think that's a great mistake. Understanding that folks have a lot on their plate. They've got a day job as well, they've got all the responsibilities. But making sure that they are checking their emails, they're up to date on the latest developments with the transaction I think is critical because the last thing that you want is to find out three, four weeks into diligence that the one of your workshops really hasn't made as much progress as they needed to and now that's going to delay closing. So for sure, making sure that folks are regularly engaged. And if folks are not engaged, then you know what you got to do in order to make sure that they get engaged quickly. Whether that involves involving senior leadership or some other way of ensuring. I think that's, that's key.

I just saw a comment about touching on sourcing since most of our conversation been on diligence integration. Hey Sabi, that's sort of your department. You got any thoughts or tips around managing sourcing?

Yeah. Make sure that you are using some sort of tools other than just Excel. I think Excel is a good resource, especially as you're keeping a running tab of all of your potential acquisitions or prospects that are out there. But having a CRM like tool, a pipeline management tool, is key. Even if it's not a deal that you necessarily want to pursue today. Having the intelligence and having the data on that is extremely helpful and critical. And then invest in the tools that are going to help you find more deals. There's not a ton out there, but Certainly tools like PitchBook and Cap IQ can help with the deal sourcing bit. Trying to find other companies that are in that space. Google was my biggest friend. I love disappearing down a rabbit hole if I look at one company and try to figure out who all their competitors are and what space they play in. And because my background is software, I look at websites like Capterra and Software Advice and figure out who else in that space and you can really start to catalog all of the companies that you think might be remotely in the wheelhouse, either from an acquisition perspective, I think, or as a potential acquirer for you down the road. Corp Dad's job is not just finding deals, but also prepping the company that you work for for an eventual exit or sale as well. Our job is market intelligence as well as just deal sourcing. For me, we've tried other products as well in the past that supposedly help with deal sourcing. I have not had a ton of luck with them. A lot of them are centered around investment bankers and lenders really and trying to help companies find financing. But from a strategic MA perspective I think that there's nothing better than start with a Google search, disappear down the hole and see where it takes you.

Get into your industry conference.

That too. Yes, industry conferences are certainly key and helpful, but in the COVID world, for instance, where that sort of thing may be a little bit more difficult, Internet searches are I think are the best friend and a good starting point for sure.

Gentlemen Aaron and Sabeet, thank you so much for your time today. I know both of you have courses you recently added to the M and A Science Academy. I highly encourage those to check it out. Sabi wrote one around managing the diligence process and he cover sourcing in there as well. And then also Aaron has a course around managing integration. Both great series, so highly recommend checking them out. I know we touched on a little bit from a variety of different topics with this.

Thanks for having me. This was good times.

Oh no, it's just beginning. We got happy hour next.

Foreign.

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