Preserving a Company's Value During Integration

Hello M and A Friends. This podcast episode is brought to you by dealroom. Dealroom is the leading project management software for M and A. Designed for forward thinking M and A practitioners, it replaces Excel trackers and old school virtual data rooms with a modern collaborative information management system. If you're paying per page for a virtual data room, then you're getting ripped off. You can save a lot of money while also improving your process. Visit dealroom.net to learn more. Also, if you like this podcast, please tell a friend we're looking to build the largest community of forward thinking M and A practitioners. Now on to the interview. I'm Kisan 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. Welcome to M and A Science Live. Putting together companies is complicated and taking them apart is even more complicated. On this podcast series we interview leading M and A practitioners to learn lessons from their experience. Learning proven techniques is key to perfect your M and A practice. I'm Kisan Patel, CEO and founder of dealroom. Joining me today is Dev Sir, Director of M and A Integration at Intel Capital. He has over 23 years of experience at intel, worked on over 40 transactions over a 10 year period. Dev is a proven executive experienced in helping business leaders and executive management on M and A strategy and synergy drivers. Today we're going to talk about preserving a company's value driven during integration. Basically how not to annihilate the value creation during M and A. Dev, can we kick off with a brief explanation on your role at Intel?

Thanks Gison. I'm part of the M and A Integration team in Intel Capital. Pretty small but efficient team. What we do is our role is primarily to execute diligence and integration on a deal and then on divest diligence and separation. The other key aspect is because we're involved pretty much from the start to finish is we're involved in developing in our value drivers scorecards with our finance teams and other deal executives.

So you sort of are hands on with both the front end process and continue through it, correct?

Yeah. So we're called M and A Integration. It's not just an integration role. We're brought in pretty early to actually run the diligence execution process and then also drive the documentation of how the value is going to get created.

You know, before I jump in our questions, this is just something I've noticed from doing these interviews where tech companies that have a higher volume of M and A activity. It seems like the natural evolution where a lot of companies may sort of divide these into separate roles as the M and A lifecycle. But now you're, you're seeing it even though it may be integration, but you're getting involved, doing diligence and it's really become more of a connected process. You've been in M and A long enough. Is that something you see as a trend in general or just part of maturity for developing an M and A function?

You know, I don't know about being a trend Kissan. In the 10 years I've, you know, in my, all my roundtables, et cetera, I've not been part of. I know that larger acquirers in the tech world do bring in their integration teams up front. It's pretty much, I feel, what we call a best known method. Because what happens when you get involved on it that early? You know, your team sees the entire diligence process. They see exactly what's going on at the very front. Even though they're not involved in every aspect of the diligence, they see what happens in your other work streams and that really sets their mind up for to see if there's any kind of interdependencies and then also see if there's any kind of impacts or integration. I've not really done a whole lot of research into. I know some of the bigger companies have the same diligence team doing integration, but I'm not sure about too many.

Yeah, it's interesting your perspective. It's almost like it's moving towards best practices more than anything.

I think so. I think, I mean, in my view it's actually a great way to lay foundation for your integration planning because the team just sees everything up front.

Well, that leads us into what are some of the common integration practices you think need to be updated or modified to create higher deal success rate.

You know, I can say most of my, pretty much all my time has been spent at intel, right. So I can pretty much opine on this. I'm sure that, you know, there's many, many, you've had many, many guests that have expert advice on this. But I think the first thing that I would say is, and this is really my opinion is companies seem to spend a lot of money on deal making and there's, you know, there's a lot of time spent on how to get the deal done, how, you know, the deal consideration, the, you know, how to, how to make sure that we get that done. Fast and they spill a lot of irks. But when it comes to integration, to some extent, I think it's thought about as this program management job. It's a process. Nobody likes the words process anymore, but it's thought about this playbook and everybody just wants to take the playbook and run with it. A lot of money is spent and effort is spent up front. Then once you get into the integration aspects, not the larger companies like us, but you see that it becomes more of a program management type of view by the execs. And you know, my recommendation is really that's the one big thing that any company that acquires out there should probably change, which is make sure that you're bringing in an expert that understands all the intricacies of integration, especially if you're doing cross border ma, et cetera. Someone that understands how to tick and tie all the interdependencies between multiple functions. What'll happen is you'll probably, you know, be able to get the integration done faster. It'll be a lot smoother. Yeah, you're probably going to pay a little bit more money for an executive like that to come in and help you or an integrator to come and help you. I think that's key. But other than that, you know, I have a few other things that we follow very closely. I would say, you know, you need a team that really understands why you acquired the asset. The other thing is culture is called out a lot these days. Make sure that you've done your cultural assessment to the point where it's not just done by hr. You need to have the MA team, the business executives, et cetera, all tied into that process. One thing I firmly believe, and if I've made the mistake of not doing this uncertain transaction of the past and I've paid for it, is you kick it off with a very comprehensive post close, you know, structure, especially based on legal entities and, you know, basically diving into how will the employees get paid, where do you procure, you know, where you're going to buy and sell. This forms the basis for the rest of the, the wiring, as they call it, of the integration, which is your IT and your real estate, et cetera. And you know, I really found that this is probably more critical when you're doing a, an asset carve out versus a stock buy, primarily because when you're just buying the entire company, the company continues to function and then you have some time to figure it out. But if you just buy assets and you're not getting all the wiring Underneath, you really need to ensure that you understand where all that stuff is going to fit in into your company. I think based on that post close, I've found that if you do that really well, the post close legal entity structure, you can then generate an integration plan and a set of milestones that actually make a lot of sense. Right. Couple of other things is having an executive that is completely aligned with you and helping you to drive the integration. And lastly, just consistent communication with the employees with the incoming executives, checking on status, making sure that you're keeping in touch with them to understand, to get a temperature.

I want to summarize some of these things because you hit on a lot of different points here and some of these are reoccurring themes that I want to hash out a little bit. But you mentioned the project management aspect. To really have somebody as that executive leader to take reign on the integration, be able to understand the interdependencies and that whole aspect of the management of integration, clarifying the why so that everybody's clear on what the goals and objectives are of the deal and stay focused on those key value drivers culture. We talked about assessments which we can go in a hundred different directions with that. Yeah, well, that's not our focus. Post close structure, being able to really set that tone as soon as you're kicking off that integration. You also mentioned the complexities of asset sales over stock sales and then also having those touch points along the way to make sure that alignment is there and things are not going awry. One top question is when you mentioned that project management executive person, I'm curious on your thoughts on this because it comes up in other interviews. But there's this cross between getting somebody that's more of a project manager per se and it's got the experience as a project manager versus the leadership from the business unit. And I'm curious on your perspective on it because sometimes it conflicts a little bit where I hear that, hey, you really need the project management skills. Now obviously somebody that's an external service provider of that will sell you on that versus you know, there's much more value. And actually somebody that knows that business and kind of knows how things are going to fit that person actually is going to have a lot more value. It's almost like you kind of got to pick which skill set is going to be more dominant as you find that person. What's your view on that?

Yeah, you know, that's a good question, Kasan, actually, and I don't mean to belittle the program Manager within the business unit. Right. You can't do without someone that actually understands the business. So you do need an executive sponsor that's on the transaction. We actually are sort of like that at Intel. We're separate, we're in Intel Capital, but we still have our business unit counterparts that we deal with. So if you're a much smaller company and if you don't have a corporate team like we do, you still need that person that actually understands the business really well. You still need that executive that is going to help you make the decisions. But when it comes to ma, especially if you've spent a decent amount of dollars, you've got a company that you bought that's got 10 different sites in 10 different countries. You need someone that can understand how to come in, assess the legal entity structure, ask the right questions about where you're going to integrate, which team, where is your procurement going to go? I mean, there's the wiring aspect and your integration plan normally is defined to achieve the value. And so if you don't have that person that really understands the ticking and tying of all those interdependencies, you're going to spend a lot of time on that integration. And in all that time, you're probably going to lose value as to either loss of some kind of milestone or didn't achieve a milestone that you're supposed to achieve. Maybe on the technical front, on the financial front, but also you have an incoming group of employees, and if they see the inefficiencies of something like that, that demoralizes them even more. And employees can go through a lot of stress during this. So my intent is not to say that a program manager can't do it, but if you really want to get value, my recommendation is you need to spend a little bit of money to ensure that you're bringing in someone that actually knows what they're doing.

But they also got another business.

Yeah. Or they can partner with someone in the business to, you know, with. They can have a partner within the business. You know, for example, if you have an external service provider.

So your weight is more on M and A experience. Purely.

Exactly.

Got it. Okay, now this is good. When you mentioned, like touch points and navigating that throughout the process, have you found any sort of techniques or certain key aspects of that that really get that level alignment? Because I talk to companies, it seems like that becomes a point of struggle where you can easily hit that chaos point where. And all of a sudden you're having that meeting with like 50 people in the Conference room. Just because nobody knows where anything's at or what happened or why the integration didn't get done or why we missed milestones. I'm curious to know what the secret sauce is for you guys. I heard you guys execute really well on that. By the way.

I'm lucky. I have a pretty large team that, you know, we have a lot of backup. So that's a great, that's a great thing. I'm not sure if I'm going to completely answer your question, so ask me again if I'm not. But you know, we run a pretty structured process, you know, in the sense that the meetings have single points of contact for every function. You know, the decision maker is well understood for every function. An escalation path is very well thought through. So unless it's an extremely large transaction, you know, we don't want it. But this is exactly what I was trying to tell you is where I think if we didn't have what you call methodology and by the way, people hate the word process and methodology in M and A, right? Everyone wants it to be fast and furious. But you know, we, yeah, we have. You know, I think every company is going to run into a red flag in integration. You're going to find out that hey, we can't pay these guys on time due to a legal entity, right. Not being ready for payroll or you can't procure through a certain country. So in my mind, that's exactly why I recommend the walking through the process of if you actually map out how the company is going to operate within your company or even if it's a partial integration and they're going to use parts of your company. If you map that out and if you have your experienced finance and tax folks in there, you're not going to have that meeting that you just talked about as to why didn't this happen. Did I answer your question? I'm not sure.

Yeah, yeah, no, that makes sense. And I think that leads into how you actually adjust the integration process to fit a company's specific needs.

There's a lot of types of transactions that you can do. You can do tuck ins, new business model. I'm probably not saying all the buzzwords here, but you can do a full on business transformation or you can do tuck ins. A couple of things as we go through the first question, I think you need to ask yourself and the team, why are you acquiring this company? And a lot of times the answers are varied. Right. So a lot of the times it's the technology and the People. And sometimes when it's a pretty large transaction, you actually have a company with a lot of revenue that you bought. So you're bringing the supply chain, all the it, et cetera. You can really define an integration methodology based on the specific need from the specific company needs. Right. So for example, if a company that you acquired is extremely fast in terms of execution, you don't want to necessarily impact that. But it could be a company that's really small and you don't want to impact that fast rate of execution by, I'll be honest, bringing it into a very large company that's, that's very, you know, is already focused and moving in a certain direction. You could land up impacting it. So we have a phased approach. You know, we do a lot of tech and talent acquisitions, so small ones that need to be integrated right away. Right. But we also do fairly large ones where, you know, you take a look at the, you take a look at the value drivers of the deal and you take a look at the company and then you decide whether at what pace you're going to integrate the transaction. And then you define specifically whether your. The people normally get integrated very early. But the other systems, for example, the supply chains and the procurements and the. It's. You could probably push out primarily because let's go with my example of a company that's executing fast, you don't really want to impact them. Integrations are distracting whether you like it or not. I mean, you know, a lot of people say, you know, a lot of. I used to have the mindset of rip the band aid. You know, you just go in, you get it done, and you move out. But that doesn't, that one size fits all doesn't work. So now it's more of a let's do it based on a few different things. What is it that we're trying to achieve? What is it that the company, if you listen to them, how would they like to go about it? And is it okay if we do a phased approach versus and also by function, taking a look at it and parsing it out so that we're integrating in the right fashion and starting to achieve the value pretty quickly?

Who's involved in that decision?

Quite a few people. We start all that, you know, we start all that work. As we kick off the diligence, it's primarily our executive team. Much of the team that's, you know, actually helping integrate the business. Also we have functional experts in every area. So it's primarily the integration team. Of course, myself as the integration or my counterparts as the integration leads. And then we have an executive team that oversights.

What about me as CEO of the target company? Do I get a say?

You know what, I had that question asked me in a transaction that came up for us. And to be honest with you, that is so important. It's super important because when you've talked about culture and things like that, so having feedback from the executive team that's coming in and saying, okay, what do you guys wanna do? Here's the value creation that we expect you to do. I mean, they are the ones that are gonna create value for you. So sitting down with them, what we do is we develop an integration plan. We go and sit down with the CEO and the CEO staff and kind of talk through, here's the thinking. What's your take on it? You know, it's not set in stone, but we really go in and talk. But I will say, just for myself, I sometimes have question whether I've done that really well or not. And absolutely, the CEO, the executive staff, and even the employee's feedback is very well regarded. We do a lot of employee surveys to sort of adjust the integration as needed.

Because if you told me your integration plan, I'm going to push back and say, dev, my marketing and sales team are completely slammed. There's absolutely no way we're going to try to change CRM or any kind of system that's just going to screw things up. We don't have enough resources. You know, you get some of those sort of points back and then you sort of put that into consideration. Or is it, hey, maybe we'll throw some bodies your way and try to make it done? Or, you know, is that kind of what the meat of that?

It's definitely a balance, right, Kishan? I think we definitely take that into account because when a larger company buys a smaller company, it's pretty obvious that the smaller company has one guy doing 10 jobs and we come in and we have a very set process. So I feel it's really a balance because you have to listen to them firstly and say, I get that. But at the same time, the other side that I feel is you're there to deliver value and there's a reason why you bought that company. And there's certain synergies that you need to get, and those synergies may be coming by integrating that specific function so that you get the value of integrating into a much larger organization. So, yeah, I think you have to listen to that, but you also have to see if okay is pushing that out, okay. And so if it's okay and if you're not going to lose any value based on that, that's fine. But if the answer is no, it does need to get integrated fast enough for you to achieve either deal synergies or excess revenue growth or something. To that extent you have to figure out a balance. The good thing about having an empowered functional area that can go in and help them is you have the capability to go and get help if you want to get them some support so that not only can they run their day to day activities, but they can also support you during the integration. That said, I think you've raised a great point, which is I think a lot of times these teams think that they're loaded twice. They're being asked to do their day job and then they're being asked to help with integration. It's our job to make sure that we're assessing that correctly and pushing it out or pulling it in as necessary.

Yeah, I mean we're going through an audit and it's like, that's enough. I can't imagine dealing with integration.

You won't believe the number of times I've heard that. Or you know, we have a tape out coming and there's no way my engineers are going to help you out. We have to take that into account when we're doing integrations because otherwise we would impact that value.

I like your perspective. Find the balance and then utilize the value drivers as the guiding North Star.

Yes.

How do you retain value through M and A?

I'm going to start with this lady. This is my pet peeves. You know, coming from an engineering background, I just remember my products, my product life cycles. You know, as a flash memory guy or a CPU guy. You know, I sort of help with designing and then it used to go from design to tape out and then you'd go into the fab and it came out, then we test it. The whole process would be, you know, nine months to 12 months and then you'd have a product. And that was the thing here. You're taking that entire process. You're completely changing strategy. You're doing diligence in two months, you're trying to integrate in six months. Along with that you have, you know, your finance issues, your tax issues, your legal issues. You have different personalities. You have an executive who has, you have personalities coming in with certain expectations. And on top of that you're in the technology world. You can't predict what's happening. You know, one day to the next. Right. And you have an ecosystem that changes every three months. And I always find it funny when people say, you know, people accuse the technology companies of not being able to do M and A. Well, Right. Well, if you understood all the aspects that go into doing a deal, which was all that I talked about, you would realize why it's so complex to get it done. And so the reason I bring that up is I know you've had many people on this podcast that talk about how to retain value, and I think they're all right. And my take is that I think it's extremely hard to take something that you've decided on six months ago, finish the transaction, and continue to deliver on that without some agility and without some core fundamentals. Right. And for me, the core fundamentals are just ensure that you have a clear set of value drivers that the whole team can march to and don't lose sight of that, because that's exactly why you acquired the company. The other thing is ensure that you have executive accountability towards that, even through change of executives. The company goes through change all the time, so you somehow need to keep a view on it. You need to ensure that there's a method to track it. The other thing is what we talked about earlier, which is you definitely need to tailor the scope of the integration. The scope and the timing. So when you're defining the integration, the first thing to do is not just say, okay, we're going to rate these guys and we're going to do it in six months. And by the way, I've done that and, and in the past, and now I let the. In my early days and now I kind of let the value drivers, the discussions with the key executives, the discussions with the incoming team, et cetera, and the integration team. We have some very experienced folks on our teams that help us. Help us really define a very tailored approach. There's one thing I realized, and this was, I can't give specifics on deals, but it's definitely a success story. There is very small transaction for a business unit a few years ago, and their ecosystem changed the minute. I mean, their whole customer ecosystem changed right after the acquisition. Could not predict it. It just changed on them. But this business unit actually had kind of put some thought into that up front, and the team that they had acquired had already put some foresight into maybe thinking that, yeah, this could happen. So they just pivoted. They just pivoted. The value drivers to some extent changed, but the value was not lost. Right. So I think to some Extent to retain value, you have to be able to be agile, your favorite word, agile, and adjust to, you know, the ecosystem or a change in a GM or a change in strategy. Right. The key thing is not lose sight of why you acquired the company because there are 50,000 reasons that you could lose that focus, you know, three months after you've acquired the company.

Right. That's really true. And especially smaller companies, I mean, I think you had a good point. When it's like six months later and you start integration, I'm thinking in six months, I mean, we're a totally different company. Even just watching our marketing function, you sort of evolved really quick. The other thing you pointed out was the alignment aspect of it too. That seems to be the big reoccurring theme. Just making sure everybody is focused on those distinct value drivers of the deal. I'm curious if you see when you talked about flexibility with that too, and we talk about companies changing or evolving, I would expect the fundamental drivers where would continue to sort of persist through the transaction.

Yeah, yeah.

Maybe you have the example of the company sort of pivoting their strategy which kind of throws things in a different direction. But in that example, I mean, is that part of it where you may start identifying a different type of value driver or something unique and be able to incorporate that into the plan?

I think that's exactly what we did. You gotta take a look at the bigger picture when this happens. It doesn't happen to us very often. I mean, it's not often that that big of a pivot happens to us. It's happened to be maybe twice in the 40 plus transactions and however many I've done, but it doesn't happen very often. But yeah, I think in this world where you may have done a really good job assessing why you want to buy the company, you will have done an excellent job in diligence in making sure that, yes, this is the technology I want, or this is, you know, as to why you're buying the company. You may have done an excellent cultural assessment, but there's 10 different factors that could seriously, you know, change the dynamic of that deal in a couple weeks. Right. So I really think the four or five different things, if you're kind of watching it all the time, if you have an executive that is responsible for it and you kind of don't lose sight of those four or five critical actions that you need to take, I think you can definitely keep the value and ensure that you're delivering it on time.

A lot of companies talk about lessons learned on their deals. I'm curious about your approach to capturing lessons learned from each deal.

I don't think Kisan, this is probably not very different from what most large acquirers or even other serial acquirers do, which is on pretty much every transaction we have, we have a postmortem. Our approach tends to be pretty structured. Deviations are based on the deal, but even those deviations are documented and we actually go through a post mortem to document exactly what happened and how we reacted to it. Each deal has. We take the learnings back through the program meetings or through the functional areas and we've got to update your playbooks or whatever. That's how we kind of handle it sometimes, you know, when you have a pretty lengthy deal, which is where you know you have supply chain integrations and customers to integrate, etc. We'll normally do 2, 2 of this post mortems. One is how do we do from, you know, from diligent start to close and slightly beyond close. But then another one after the integration's done to actually see if there were any learnings from the integration that can be pulled in and we can get some learnings into our playbooks. So I'm not sure if it's that different from what other companies do.

It's interesting. I get the whole idea of the playbook model where that's kind of been the traditional approach. You sort of have a driven checklist and they evolve and sometimes they get pretty cumbersome because if you keep compiling them deal after dealing with, you sort of got to go back and clean things up or at least they get huge.

Yeah.

And if you don't, you're that annoying buy, you know, the buyer that either the banker or the target company doesn't like because you're sending a bunch of requests that are completely irrelevant and you're answering things that nobody looks at. So there's sort of that piece. But what's interesting is some of the, maybe the broader aspects beyond that. And I'm thinking more of like the center of excellence type of approach where you're really bringing together best practices and it seems like you know the steps of doing the post mortems and things like that to be able to identify, hey, here's some things, the key approaches that went wrong. I'm curious and even looking at different situations where I think the biggest challenge isn't really capturing those lessons. I think it's more about bringing it back and really utilizing that, that knowledge and sort of keeping it from getting lost. Because I'VE seen all the little data banks and the Excel sheet that has a little matrix of all these little things, lessons compressed into these different views with all the different functions behind it. But how do you sort of take that into something deployable, especially when you're starting to pull people in from various parts of the business that they're excited to do the deal, be part of M and A, but they have no fricking idea on what they're doing and getting them up to speed and sort of bringing some of that knowledge to them, saying, hey, here's some do's and don'ts, by the way, that you want to pay attention to.

Yeah, you know, I think this goes back to the point that I made earlier is in any deal you need sort of that M and A advisor that can see 10 steps ahead, you know, that looks at the scope, defines the integration plan for you. But that person's role is not just that. Right. That person's role is also as a coach and a mentor for the business unit executives or the business unit program managers to kind of ensure that they understand the decisions, et cetera, that they need to make going forward. Going back to your point about learnings and you know, these huge databases where you keep, where you keep these learnings. Yeah, definitely. Putting that right back into a playbook just means that your playbook is getting bigger, which just means you're making that integration a little bit more complex. That's not what I'm recommending. I think what I'm recommending is on every deal you're going to find three to five things that you could take back. And even if it's just an education, with sitting down with the entire team and saying, hey, here's what happened on this deal and kind of reviewing it, if those folks continue to do M and A for a fair bit of time, it does stick in their minds. And it doesn't mean that they have to go back and read a playbook to do that. But I think there's enough knowledge in the system where you can say, hey, wait a minute, I think on DLX Dev ran into this problem and I can actually talk to him and kind of get some guidance.

So.

So that helps make sure that you're not just, you're not becoming a dictionary in terms of playbook items. But at the same time, I think that's the upside of having someone that just understands these things up front so that you don't constantly need to go back to a playbook or you constantly don't need to Think through the fact of, hey, am I doing the right things on this integration? Not sure if I answered your question, but that's where I think you were going.

Well, I want to, I'm going to throw a couple challenges out there. One, I'm going to touch base. I'm sending you a copy of my book. I wanted to get your feedback because it's really modeled off of what Atlassian's approach is in terms of their approach of capturing knowledge, turning it into plays and building out game plans around it as an alternative to Playbooks. The other thing too is I'm curious anybody listening to this, if they have some ideas, shoot me an email because this is something that I think is a challenge across organizations. At the end of the day you got to be able to get people up to speed and get them to really know what they're doing when they're participating in these deals. And I think that's even feedback we received post our conference was one of the biggest challenges was just the whole training aspect and there's limited programs out there on a general basis. But then you also got to develop it as an in house resource too, which sounds like you do, you know you have it, but it's sort of taken into the next level where it's more of that how do you get it where it's really on demand and getting that knowledge there when you need it.

And then one thing, one thing I found, design. I'm not sure whether everybody experiences this considering that my view is myopic to one company is I think everybody can follow a playbook, everybody can go and do the next step in an Excel sheet where I think it becomes a science, no pun intended, is really to two or three things. One is being able to take a look at a situation and predict the five different actions or responses you're going to get on that. The other thing is taking a look across your entire stakeholder list and trying to figure out, okay, what impact does this decision have on myself and the, you know, the incoming company? And is that the right, is that the right message to be giving? Right. And I think that's where. And I had one last point, but I forgot. But really my point is I think you get that after doing X many deals. And I'm not saying that you can't do that on your first deal. It's just MA is a business learned through repetition. So you make X many mistakes and you've learned from all of those and hopefully you don't keep them. And I'll be Honest with you, every deal that I do, I think ha, this is gonna be the easy one. You go in and there's always this curveball that comes out of somewhere and you're like, wow, I never saw that coming. And it's something you've never dealt with. It's because of the combination of cultures, geos personalities, different technologies, ecosystems, multiple legal issues, etc. That every time you do one, there's one or two curveballs that come at you that you never thought would come.

People always come back to culture and it's always the, the blame item. There's the culture problem. That's why we have people problems, that's why we're not moving forward on these ass items. How do you view culture and even making that part of your diligence?

My first, I think in general this and this is based on, you know, conversations I've had at roundtables or elsewhere also I think, and when I'm having this conversation and culture is the new buzzword, I think in emanate, right. I find that the first thing I think you got to do is realize that the incoming company does have one. They have a culture. And so even though people say I'm going to go and check out their culture, they forget that without really intending to, they go and try to put their culture on top of that company. And that's where you start. I don't care how small the company is and how badly they want to get acquired. I think even if they want to get acquired, they just love that culture that they've developed and that's really important to them. Right. So you know, the culture surveys help. We have some excellent stuff that we do in terms of culture surveys to really understand the match. But you know, taking a 50 man, 50 person company and bringing the 50 person company into intel or any company of that matter or any large company like that, you really need to make sure that you're doing more than just, you know, culture survey. So you know, I think my view on diligence in culture and honestly I'm not by no means I consider myself to be an expert in this area, is really having conversations with the executives on their points of view, having conversations with some of the key employees on their points of view. You called out something earlier which is, hey, how much does my voice as being the guy that's getting acquired? How much does that mean? And you talk to them and say what do you think we should be doing with this integration plan? Or what do you think we should be doing from A value creation perspective. The minute that you've kind of shown them that they're part of that process. I think you may not have diligence the culture to the level that you need to diligence it, but you've at least shown the incoming company that you care. There's a reason why you're acquiring them. I'm going to quote an exec from our seen a very senior exec from intel that had a fantastic statement to these employees that were coming in and he said, you know, we bought you so that you could change us. Not that, not just for us to change you. And it had a huge impact on these employees, you know because it made, you know, it made them think that hey, you know we're and employees go through a lot of stress and these because you know, just think about it. You're thinking about you know, all your pick your paced up things like am I going to get paid down to are you going to take my laptop or are you going to. So just doing that upfront assessment and being very aligned as to how you're going to respond to it through constant communications, meetings, your diligencing doesn't stop. I feel at close your diligence continues through the integration and just to make sure that you're not missing a beat when it comes to the employees because they definitely have an opinion most of the time.

Yeah, that makes a really good point. Well, you obviously don't have all the information until after you close do there's definitely a lot to learn.

No, we actually do have a decent amount of information pre close the pre close and pre sign. But my point is sometimes you just don't catch this one nuance. The reason I say it, we had an acquisition where it was a remote Geo and after a few months I realized that nobody had been there and we had been there for day one, et cetera but we had not been there. And that's important to employees that they see someone come face to face and talk to them and get their feedback.

I really like that quote you mentioned. We bought you to change us and I really think that's a sticking I mean just hearing that myself as a founder owner of a company, it sort of gives a whole different light and perspective on M and A. So I, I, I think that's a.

Pretty, I hope I don't get in trouble for using it but I thought it was a great quote.

Well it's if we've saying it meaning it it's two different things so you know, but I, I, I Like the mindset of it that if you can approach M and A with that view, that hey, we're, we're sort of buying this company for the uniqueness it has and, and whatever those drivers are. But it's more of we really want to embrace the, the things that we can learn from you. I think it's a really great way to frame things especially for both sides to get that mutual alignment less so feeling drugged through the process?

Yep.

Well, you know, we talked a little bit about the transition from diligence to integration and making that a smooth process. What are your tips and tricks around that?

So one, I do think going back to my recommendation for any company that's building a team to do M and A is exactly to ensure that, that your team that's going to be doing the integration is very much part of diligence. I think that's super important. You see the innards of the company that you're buying. You're part of all the discussions as to when you're in diligence. You're seeing all the other aspects of it. So I can't plug that more in terms of the importance of something like that. We start diligence pretty early in the sense that. I'm sorry, integration planning pretty early. It's almost in fact sometimes we start. We have to redevelop them way before we even start diligence. But sometimes there's a preliminary because you've not done your diligence. But as we go through each functional area is kind of taking a look at it myself as the overall lead will be already kind of putting the framework for what I call the post closed legal entity structure. And then the general integration is too. And having discussions with the executives on what do you think about all the various activities. Our HR team does an awesome job of discussing work structures and all of that. So that becomes very critical and that happens very early. My recommendation is at least this is my personal view of my personal style is the integration planning needs to start very early. And if you don't have the ability to do that, you at least need to start it around mid diligence. Because that's when you know if you put some thought into it, you can actually go and during diligence then go back and check to see if your assumptions are correct. Because if once you're part past diligence and let's say even worse, your past sign, now you're trying to diligence that company and you've already kind of signed the deal and you know you're trying to. So to answer your question, and I think maybe a couple is really start early, develop something throughout the process, make sure that you're thinking about the integration planning mid diligence, kick off a clear view on what your integration plan is going to look like. And then once you close the deal, you're locked and loaded and then you're executing.

What are the must haves? For example, you must have the HR folks in early to really start assessing the people and culture. Or you got a must have that sort of alignment around the go to market and that lead. What are your must haves?

You mean on the diligence front or.

Yeah, even diligence, but more so prepping the integration because you know, you sort of frame things that you got to do stuff early. But you know, obviously you can deploy a lot of stuff early. But I'm curious, like what are the sort of must have key things that you've really seen as like the real driver of that early alignment? Everybody says hey, integration, you got to plan early. And I think that's become the known thing now.

The known thing, yeah, we finally wised.

Up to that in the, in the M and A community, especially the M and A science community. We're forward thinking practitioners, part of this group. So not only are you, we're going to learn from you, but you're going to learn from others. So that's kind of become like the known thing. But, but even within that, you know, and it's a little different. Where I've heard folks, they really emphasize that the go to market needs to be aligned. You got to have the CEO paired up with the integration lead, developing that, that go to market and that's the big driver of the successful integration. What are your must haves?

I'll tell you, it's very specific to the deal. But the one must have pretty much on every deal is all the HR work that we do up front, bringing them in early, understanding the business, understanding the people, working to figure out how the people get integrated, where they get integrated, all of that. I'd say that the next must haves generally tend to be the technical integration, which is how are you going to integrate this technology? Is it a tuck in? Is it part of something that you're already producing? Is it something brand new that's next along with that very closely? It's not even the third. I would say that your hr, your tech and your customer diligence is probably the top three. But sometimes we buy a tech and talent team that is Pre revenue. So we don't really have customers in that area. So your primary diligence becomes your people and your technology. Right after that comes the financial diligence to ensure that you're. The financial integration, if you want to call it, to make sure that we're achieving all the synergies and we're achieving finance controls and doing things right in that realm. And then after that is the rest of the wiring, the operational work, which is primarily IT and real estate, you know, tax trade, all of that.

Well, I appreciate that perspective on that order. That makes a lot of sense to go from hr, tech, the finance and a lot of the operational details.

Yeah. And I don't want it to be taken the wrong way. I mean, all of this comes together to form the entire integration plan, right. So these. Everybody is sitting around and it's just that one person goes. It's just how you prioritize it so that you don't overwhelm either the business unit or you don't overwhelm the company that you're actually buying.

And it goes back to our previous points about aligning to the value drivers of the deal while you're actually doing it. Let's get into some common mistakes. You see executives make that impact.

A deal success, common mistakes. You know, honestly, I'm not. I wouldn't call them mistakes. For me, it's always been, you have either an experienced exec or you have an inexperienced exec. You have some execs that really have done tons of deals and they just know how to do it. The others, you know, they come in, it's their first deal. Yeah, they probably have a little bit of deal fever. You know, they're excited to get this technology under their belt, you know, and get working on it and drive value. So there's a little bit of an experience that leads to, you know, them thinking that this can just work the way that they do their daily jobs. Right. And it's. And it doesn't. So I think rarely do you get an exec that is just not going to listen to what you're telling them. And even if you do, it's just a person, you know, it's just someone that you probably need to. So I think that's where the M and A executive or the M and A, the expert comes in to really help them, you know, kind of tell them what decisions they need to make, how fast they need to make them, you know, how to manage the deal fever. Right. Which is, hey, you know, this really. This deal's not done till the deal's done. Really, what is their role in the decision as a decision maker, what decision that you expect them to make, et cetera. My take is if you don't really kind of give them guidance on those kinds of things is when they actually make mistakes. Right. So you don't explain the role. You don't tell them when you need their feedback. And when you don't need their feedback, you. You don't show that you're an expert in the field. But if, you know, I think any executive out there will take your help when they realize that, okay, I'm kind of out of my realm here and I need this person to help me out. Like I said, I wouldn't call it mistakes, but I think every executive, I think the big mistake would be if the executive didn't realize that someone with a lot of M and A experience that's giving them some guidance. It's because that experience is talking. And that would be the mistake is to say, no, I know what I'm doing and moving ahead and trying to continue to make decisions that might be not the best for the deal.

That's interesting. So from the target company's perspective, it's essentially valuing them in experience that's running the process or guiding the process. But then on the flip side, it's more about transparency and sort of letting in, hey, these are sort of the key things that are happening and just keeping them in the know about those things earlier the better.

Sounds like I see where you're going. I was looking at it more from an executive that's, you know, working with me from, you know, any executive that's working from the acquiring side on the internal.

So I guess. So that would make sense as well. Is sort of.

Yeah. So from the other, from the other point of view, I, I've not seen deal fever, but I've seen enough. Definitely they're excited. They try to sell every bit of it. When you see a bunch of transactions, you see all kinds of folks that are trying to sell their companies in different ways. But I've been lucky even up to recently, had the good experience of really bringing on some real quality execs that may not be M and a savvy, but they are willing to listen. You know, they are willing to listen and they're willing to ask questions. And if you really build that trust that is your job to do, then then, you know, they don't make any mistakes, you know, but you know, they have their view on the integrations. Right. They like kind of like you said earlier, you know, I don't have the time to do any kind of marketing integration. I'm going to do it on my own. And that may be a mistake, but that's our job to kind of explain why it's a mistake and kind of steer the boat into the right, into the right area.

Very cool. Any other tips that you would give other sort of practitioners around, maybe even doing their first deals or just some key things that really sticks out to you? It sounds like you lean on a lot around sort of the experience as well as that guidance in doing the deal.

Yeah, you know, my tip would be, you know, I think it's, it's, it's deals that are fun, you know, make sure that you approach them like that. Like I said, I mean, don't underestimate the interdependency factor and the factor of not knowing something that's, you know, that's underneath. Also be careful on the decisions you make without really digging in and understanding the impact that that decision may have on the overall deal or on your stakeholders because not everybody's going to be watching you at all times and you may make a decision that. So rather than just being in your little silo, make sure that you're kind of thinking broadly so that you're looking at it from all aspects. And yeah, you probably will make mistakes, but as you get good and deal on deal on deal, the mistakes will a little less than. But if you have your, you know, if you have your focus on it, maybe you won't make any mistakes.

What's the craziest thing have you seen in M?

And a craziest thing I've told you about one of my craziest things, which is I can't believe that I have not had a single transaction in which there was no curveball. That's. That for me, that's pretty crazy. The other crazy thing is trying to do deals in this Covid environment. But I think one of the things that, and I'm not sure maybe we've talked about this a while ago, but one of my earliest deals, and I'll call this on myself, this is my fault, so I can say it and I won't say the geos and I won't say any kind of details, but this acquisition happened in Europe and I didn't follow my one recommendation of actually doing the post close legal entity structure and understanding all the legal entities and whether people can move first and the assets can move later. Those kinds of discussions had not happened so, you know, we, we moved the people first into a new legal entity that we had formed with payroll, etc. And then I found out that in that, in that Geo, you can't move the people first and have the assets in a different company. And two days before payroll had to move all the people back into the original, into the original company. They had to communicate that they were going to. In those days, I think you guys, you were actually getting pig slips in Europe. We had to communicate that those don't matter, you're still gonna get paid. And you know, there was a lot. So my fault for not being really smart enough to really. But that was at that time or in my whole career. There's one thing that people keep calling me out for, you know, all my friends that are in the community, at least at intel, that keep calling me out for, is they don't let me forget that there was a time when I actually, you know, came close to impacting someone's payroll. Luckily nothing happened. The team was so good behind me that they all figured it out. But definitely it was, you know, being the integration lead, it was my fault. Probably one of the crazier things and probably. I'm sure there's. There's been more that I just can't remember right now.

That's a great story. It's an interesting question and I think it should be an interview question because what I'm realizing is it's an indicator. One your response is how humble you are. So the practitioners that tell a story about a mistake is sort of. That's a characteristic, how humble they are. Otherwise you just kind of get a wild story in general. But hey, Evan, I really appreciate this conversation, taking the time to learn some lessons from you. Look forward to a follow up interview in the future.

Hey, thanks a lot, man.

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