Realizing Go-To-Market Synergies

Hello M and A Friends. If you're looking to improve your in house training, we have corporate training plans provided through the M and A Science Academy. Give your team members access to the best in class courses, templates and networking opportunities in the industry. Our Academy was designed to lead practitioners with the how to of M and A practices. If you're interested in learning more about individual or team plans, go to mascience.com academy it's also a great way to show your support for M and A science. Again, that's mascience.comacademy onto 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 where leading MA practitioners share lessons learned from their experience. If you're interested in keeping up with the latest from M and a science, visit mascience.com subscribe to our free newsletter Every week we share highlights from our interviews and invitations to events as we build the greatest community of forward thinking M and A practitioners. Again, that's mascience.com I'm your host Kisam Patel, CEO and founder of M&A Science. Joining me today is Karen Ashley, Vice President, Corporate Development Integration at Cisco. Cisco's one of the largest tech companies in the world, trading on NASDAQ under csco. Today we're going to talk about how to realize go to market synergies Karen, how you been?

I've been great. Thank you for that very nice introduction. It's great to be back. Excited to talk about a topic that is absolutely top of mind for us at Cisco. And I can guarantee you because the amount of blogs and articles I've seen written on it most recently is top of mind for probably most buyers with valuations over the last year. Plus going through the roof Cost synergies is not enough revenue synergies go to market synergies are what usually is needed to validate the deal and really make sure that it's going to deliver on what we need. I've been reading a lot about it. Obviously it's always been top of mind for us, so I'm excited to talk about it.

Should we start with a quick one on one on your background?

I've been at Cisco for 22 years and for about six plus of that I've been leading our M and A integration team. Cisco is a serial acquirer so so we do usually 8 to 10 acquisitions a year And a handful of divestitures. So we do also the separation side of the house. We buy everything from small tuck ins, a couple of people, tech and talent to larger product and platform acquisitions. And obviously that's where the go to market synergies come into play on the larger acquisitions and the product deals. We recently had a not recently in the last year plus have a new CFO who I work for and has come in with what he wants to see and what he's expecting to see around. So that's driving a little bit of our focus over the last year on things that we're looking at.

You're an industrial engineer by trade.

I am an industrial engineer, yes. I spend quite a bit of time at Cisco and Supply Chain which I'm glad I am not in supply chain right now. I thought M and A was hot, but supply chain now everyone knows what supply Chain is and before that in operations in Cisco and other companies. But yes, my background is undergrad and grad in industrial engineering. So all about productivity and efficiency.

Is there any skills or thinking you identify with that you've ported over to your current role?

Absolutely. Came in with obviously a strong operational background but not knowing M and A. So I've learned M and A. But what I've brought with me is the thinking around. I worked in a lot on new product introduction around the organic side of the house. So the organic build, develop, build and scale. I brought that with me as I came into M and A because it's just the inorganic side of the house and how I partner and work with the business leaders, the engineering leaders, even the corp dev team. It can't be where you throw it over the fence and integration is going to make it work. So that's very much an approach I brought in. Counter to that from my engineering background is the partnership that I had between supply chain and engineering was hand in glove. You can't design a product that's going to scale to millions unless you design it. You can't scale it unless you build it into the design. And so it's similarly on M and A. I came in with the thought process of look, I'm an equal partner to our corp dev team and to our business leaders. I know sort of the excitement of the game is the front end of the process and it is the sourcing, the negotiating, all the power play, that excitement. The end is not closing on a deal. The end is really making sure that you're achieving the success of why you bought the company. That's very much where an integration operational background comes into play and our role with our corp dev and our business leaders is right up there up front, early NDA around what's the sourcing strategy? What targets are we looking at? How do we take our past experience on what we are good at and what we're not and to bring it forward in how we define what the risks are and mitigations for addressing those risks. So I'll give you an example of we go through a typical commit process that I think most companies do with our cfo when we want to invest in a company or make an acquisition. The first thing he'll go to is saying I want to go right to what are the risks and mitigation plans. He's already taken a look at the deal model but the conversation that's across all the functions he wants to talk about what are the risks that we're seeing even before diligence? What are the potential mitigations that we need to plan for? What are we going to validate during diligence? And then coming out of diligence is really saying can we actually achieve these mitigations in order to deliver on the value of why we're buying the company? So I would say that was number one thing I port over is my relationships with, with engineering and the business leaders that were partners in this. You can't just throw it over and expect us to go deliver on what you want. And having a role very early on in the process. I think we could be perceived as being a little bit of a naysayers but we're testing the thesis and we're really probing hard and saying so you think you could do that? Why do you think you could do that? We've never been able to do that before. What is making this time different? And we're there in the game with them to make sure it happens and but it's really being very thoughtful around knowing ourselves and what we're good at and knowing what we're not good at.

There's some good takeaways here. Getting involved so early that you're involved in the sourcing strategy. Have a sense of that recognizing capabilities are really surprised in how early you're thinking through of risks before touching formal diligence and then the validation what's the right way for a corporate dev leader to look at it? Feedback loop on your hypothesis, the whole closed loop.

Yes, they may not like it but that's what they could count on us to do.

That's how you make M and A successful have a Good feedback loop throughout your life cycle and change plans accordingly.

We've gotten more data driven, I would say because we were a little bit more oh, the gut. I think we could do it. Think is not building a lot of confidence. So we do have a lot of data because we are a serial acquirer and we are able to do some, I would say rudimentary analytics right now and to go back and look at characteristics of previous deals and have them inform our deals that we're doing now. You obviously have to bring your own intelligence. This is not AIML full blown, but it is using data to help inform where we're going.

Yeah. So there's a big component of contributing to the learning side and how that matures the overall M and A function. Go to market. Go to market's been interesting. Karen. I've had a number of conversations around it where I'm convinced this is the real make it or break it of M and A integration. I could probably write a book about this topic if I interview enough people. I wanted to get a sense of the weight when we think about synergies, obviously it changes deal for deal. How much of this weight emphasis focus on cost synergies, weight emphasis, do companies just get that wrong? But I'm just curious on how do you look at that and getting a little bit of the sense of where does the real value come from?

Speak for my experience, which is really just Cisco but also talking to peers in the industry, we've always looked at go to market synergy. So it's not a new concept for us. Cost synergies is something that we've always less focused on. We always say we're going to consolidate in the GNA areas. We're going to get cost savings by maybe using the same suppliers, aligning to Cisco sites and getting out of some real estate more rudimentary cost savings. But they're really not built significantly into the deal model. The deal model for us is really based on revenue synergies. When you're looking at a product or a larger product which is for us a platform deal, they're all driven by the revenue synergies. It's been something that is not new for us, but is something that we know that we're continuing to get better at delivering on. Number one, it starts with building realism into that deal model. And the realism is really informed by our historical experience. So it's Cisco's historical experience. So I talk about all that data we've been collecting. We also obviously track the performance of all of our Acquisitions, which includes the financial performance and the revenue synergies. So we're able to go back and look at similar deals and say okay, what did we do in the past and why do you think it's going to be different this time? What do we need to do differently if we want to achieve a higher level synergies. There's also some standards in the market that we start to bring forward and say typically when you looking at across companies, what is the success rate on the go to market synergies? And so we start to incorporate that into there and then we start to probe it. I think it's more typical of our deal side of the house as being more aggressive. The business leader wants to do the deal, they have to be able to justify it with some revenue numbers and that may inflate what we think we're going to be able to do from a go to market. So number one is building the realism into it because if it's unrealistic, everything else is built off of that plan. A big part of the realism is being clear on what the offer is, what are we going to sell, what is our customer going to buy, which customers are we going to sell to, what are we going to sell to these customers and who is going to sell it. Cisco is a pretty complicated route to market go to market engine. So we have our own sales team, we have specialists, we have overlay sales team, we have partners, we have channel partners, we have a pretty complicated route to market. So getting very clear it's not all of those people are going to sell all the same thing for all the customers. It's really starting to get real good clarity on what your offer is. Is it technically feasible? Are you going to be able to build it and then are you going to be able to sell it and who's going to sell it and whom are they going to sell to? So starting to build out all of those sales plays that really tie to that deal model. When you think about the deal model, we're starting to build out the integration PL plan from a go to market because the deal bottle is built up from the bottom up.

Where are we in the timeline of the deal?

We're still in pre announced for us.

Post LOI prenounced I would say so.

So we get a pretty good sense. We go through our own internal milestones around a commit process. So prior to an loi we go through our own internal validation. So at that point we have to have a pretty good sense of what are we going to achieve and how are we going to get it so that our CFO is going to say yes, here's an envelope in which you are going to be able to spend, go negotiate a terms and get into exclusivity, pre diligence and pre definitive agreement. So we're in that really early stage where we have to have a pretty good sense of what are we going to achieve. Our CFO calls it your P times Q model. What's your price times quantity, what's your bottoms up view of how you're going to deliver on this? And then that really translates early on into okay, day one close. What are we going to execute to? What is that go to market plan that we're then going to start to execute to?

It seems like things progress and evolve and who's involved directly with that? I'm just trying to get a little bit more of that visual on how this really comes together as a planning perspective and really start detailing those components out. Because it sounds like there's a lot of stuff you're reviewing on your end internally and then at some point you start interacting with the counterparty to really get more of a detailed strategy.

We're earlier on pre term sheet or loi. It's very much led by our deal team and but what we're running side by side with them while they're doing the internal or the negotiations with the target. Once we get into, you know, we're post LOI or term sheet, we then start doing diligence and in diligence we're validating a lot of the things of course that we're thinking about and some of it may lead to hey, without disclosing too much at that point, but is what we're thinking feasible? You know your business better than we do. Are these things that we're thinking post close, Cisco and the target together, this is what we want to achieve. Are those realistic? How achievable are those? So we'll start asking questions questions knowing what our thesis is, what do we want to validate so that post diligence as we get into our final internal commit model, we have clarity on really what are we going to do starting day one post close? What's the offer we're going to go sell, how we're going to sell it, what's the route to market? What's the go to market? And then can we operationalize this? If you think about Cisco going through our own transformation as a company from a box on Prem to Cloud SaaS provider, all the companies we're providing are where we want to be. So can we operationalize the business model, commercially operationalize the model that we're bringing into the company? So we have to do that validation before we even get into a definitive agreement. Can we actually realize these synergies or is it going to be a year out, two years out? Because we don't have the operational infrastructure and backbone built to do this yet. So we've got to. And that gets all incorporated back into our financial modeling because it's not only what but when the timeline, which is typically less earlier or later.

Do you have a prioritization of thinking of go to market? Because I immediately think of the sellers handshaking and figuring out how they're going to get in front of the customers and pitch together. But then there's this whole back end infrastructure that is the more complex part in a lot of ways. How do you prioritize and think of those different components?

We definitely look at the infrastructure very early on because we know ourselves well enough that we can take it and shove it into what already exists today. But if that's going to break the model, then that doesn't make any sense. So when are we going to have things that we don't have today? And so that for us is number one. Because you could have the best sales team in the world, Cisco sales team and acquired sales team. You could have a strategy for them to work together. But if the customer is never going to get the product, we're going to invoice them incorrectly. The sales team isn't going to get paid for what they do. You're not going to be able to rinse and repeat. And so having that backbone for us, that whole infrastructure and the architecture and how we're actually going to operationalize it comes first. Once we validate that, then we start to get into, okay, understanding the customer segmentation. Which customers, are they a mature customer or are they more of an immature customer? Are they going to buy point products or are they going to buy bundles? Therefore, how are we going to sell the offer? Which customers are we going to sell it to? Which ones have an affinity to buy from Cisco versus which ones have an affinity to buy from the target and which ones are brand new customers for Cisco, for example. And then how do we bring this together in our go to market strategy meeting? Okay, day one, these are the customers, we're gonna sell these offers too. And the target sales team is gonna take the lead because they're existing target customers. Or the Cisco sales team is gonna take the lead assisted by the target sales team. When you're looking at a specialist play, we're not perfect at all. I'm sort of giving you the vision of what we need to do. We're still really working through, okay, how do we do all of this? How do all these pieces come together? Because typically when you do an acquisition, it's the bright shiny object and everyone wants to sell it to everyone. And so how do we really prioritize who we sell it to and who sells it? So it's just, it's successful that we manage that.

There's a lot of variation depending on the overall strategy because it can affect go to market, which makes you realize there's no default cookie cutter template you can follow.

I would agree with you.

Here's the variations you see. What's the range of thinking through go to market from hey, here's a product with no sales team. Sales team, that's product that's crappy and probably gonna get sunset. What does that range that you encounter when it comes to thinking through go to market as a strategy?

We've seen everything from what we're buying is basically gonna cannibalize an existing Cisco product. So how do you manage that with managing that transition? Because you don't want to lose the customer and so how do you manage that? We've seen it from the target product and customer base needs to transition into where Cisco is going to be. Meaning we're going to keep the product for a short period of time just so that we keep the attached to the customers that the target had, but we're actually going to sunset their product. But we want to transition those customers to the either Cisco product or the integrated offer that we're going to have with the targets technology and Cisco together. It's funny, I think everyone says when someone asks you what do you do on an acquisition? Well, it depends. The answer is always it depends. It depends on the company, the type of acquisition, the product that we're talking about, the customers, the industry. So it's always it depends. But I would say it fits into a couple of models. The go to market drives a lot of it, especially certainly on a product deal is what's our strategy around go to market? Is our strategy to sell an integrated offer that's going to be a new product together? Is it going to be retained the product and integrated into our portfolio? Is it going to be the exit product and move the customers? And that to me is the hardest part. We talked about the modeling aspects of it, but clarity on your strategy and clarity on, on the strategy into execution. So you can have a strategy, you need a strategic plan that is then executable, which then you build your integration plan and you execute based on a lot of work that we do up front is really honing that strategy. And really, is this what we're talking about? Oh, no, I thought it was this. No, I thought it was that. Okay, let's take another rev at it. And that alignment across the company, Cisco, and then the alignment with the target is really key. So that day one, we all know what we want to achieve. And again, more often than not, it changes. It's not like it's locked in stone. But as we learn more, as the target learns more about Cisco, as the industry evolves, we're going to have to make changes. But the most important part that I believe is that the alignment between the key stakeholders on what those changes are and what does the revised strategy look like so that you don't have someone working on version 1.0 and now everyone else is on 2.0. And so that's a big part of what we do too, is really honing what that strategy is.

As a CEO acquirer, what advice do you have for me to make sure I don't screw up?

Go to market integration, be realistic. I really, really feel that. I think if you start off with an unrealistic strategy or unrealistic go to market synergy number.

Karen?

Yeah.

Half my job is to be optimistic.

There's a balance between being optimistic. Okay, because I'm not going in and saying, okay, be negative about it or be a naysayer. But I'm saying optimistic, informed by realism. You can't go achieve something that you have never done before. Your track record is saying that the last 10 deals we way underperformed. But what's different? My question would be, I'm not saying no, but what do we need to do differently to make this 1 perform as 2x what the last one did? And that would be the question. And more often than not, it was like, I believe we can just do it. To me, that's not a strategy.

You're looking for proof in the pudding.

Yeah, give me the proof, show it. And it's really hard because everyone wants to do it. And it's not to be perceived that we don't want to do the deal or move forward. It's getting that alignment about everyone understanding if we're going to move, what is it going to take to make that happen? Is it going to take a certain level of investment Is it going to take a certain level of hiring, Is it going to take a certain leader to be aligned, the culture aligned? What is it going to take to make that happen and be realistic around it and then track it and make sure that we're performing to that?

I think the problem is, as a deal person, you tend to work backwards where you figure out what you need to do to get the deal done and then you build the case.

The problem is you're only trying to get the deal done.

Exactly.

That's like a third of the story to me. I break it down into two pieces. You've got getting the deal done, everything from sourcing to closing the deal. Then you've got your integration piece of it, your second, third, okay, how do I actually get this thing to perform and to deliver on what I said I was going to do? Year one, year two, then you've got the whole other segment of it's post year one and year two. We track performance for five years for our larger acquisitions. If you don't stay on without that target or the business, the performance starts to deteriorate. So how do you really make sure that we're continuing to invest and then make sure deliverable? So I break it up into the third and third. And so what you're saying is, oh, you're successful as a deal guy. If you get the deal closed, it's like that's only a third of the work. And I would beg differ. That's probably. It's honestly the easier part of the work.

That's what we're here for, is to challenge conventional thinking. And I like your thought around breaking it by thirds because now your whole deal execution portion is only one third of that consideration. We just got to socialize this around a lot of boards and how they think about deals with the board.

At Cisco, I've had to go present to the board, our board acquisition committee twice where they've asked me about deal performance. I've had to go in with the data and talk about how are our deals performing, why are they missing in certain places, why are they achieving in others, and what are we doing different on the next deals?

Do they relate that over on the current pipeline?

Oh, for sure. It's got a big overhang onto the current pipeline.

That's good because normally you don't hear and that's right. Seen that as a theme in the industry where it's evolving that way. I think you got a great framework that we should socialize in our industry. Karen's third. Third. Third you got the pre deal, the post, and either the continuance or the.

Post post, the last part of it, to be honest, at that point, my team, obviously the Cortev team, we're out of it at that point because we're moving on to the next one. And it's the business leader, but again, working for the cfo. He cares of how this is continuing to perform. I've got a big role in the governance, the monitoring and the governance of the performance of the acquisition. And how do we incorporate that into our normal cadence of business reviews? You can't just go and say, oh, my business is doing great. What about that acquisition you did three years ago? Is that still performing? You can't blend it into the overall portfolio and try to forget about it because that was a specific investment that the company made. Holding leaders accountable. It does have a big overhang. One of the things we started doing is as we start to do new deals, we're starting to look at not only the historical performance of like deals, but how has this leader performed on past acquisitions that they've sponsored and how has this business been performing with the past acquisitions that they've done? And so those are analytics that we'll bring to the table with our CFO to say, hey, you might want to take a look at this leader. Doesn't really have a good track record what has happened and really hone in on these areas as they're looking to do a new acquisition.

The corporate development scorecard.

Exactly, exactly. Now the next step is getting paid based on it.

I was curious on this.

We're not doing that. No, we don't do that.

Well, in the scorecard, what would be the key metrics? I guess it depends on the deal strategy.

Yeah, but you know, the deal strategy. But every, basically every deal has the value drivers, typically the value drivers around an aspect of financial performance or could be market position, something around the go to market. It'll have something around the technology in terms of the product roadmap, the technical deliverables or product integration. And then I'll have something around the talent Cisco always acquires to grow. So a big part of the growth is the talent. Without the talent, we're not going to have the technology. So I say the end result is retention, but we back off of retention. And look at how engaged are the employees. Do they feel that, you know that do they connect with Cisco's vision? Do they feel valued? Do they feel like they can see where they fit in this strategy? And so we do a series of checkpoints or surveying with the acquired employees, because otherwise, when it gets to, oh my God, they left, it's way too late and you're going to have some talent that leaves early on. Our goal is to retain as much as the talent as we can.

It's not a hard metric. Would you have letter grade or would you do like a GPA score?

It would probably more of red, yellow, green, like traffic light type of colors. If I take retention as an example, we'll build a retention metric over the course of, say, three years. How much attrition can we afford and still deliver on the product integration, still deliver on the financial results? So those are like engineering and sales retention. And we'll take it based on. We'll look at the historical attrition of the company that we're buying, we'll overlay it with what our needs are to achieve those other value drivers I mentioned, and then we'll break it out. If they start to fall within a certain higher attrition than we planned on, then they start to get into that yellow zone, the red zone, and we trigger different actions. So I use a lever of reviews with our CFO to trigger action by our business leaders to make sure they know that this is being looked at. It's a lot of work on our part to get them ready, to make sure that they have their story and their act together, but they're accountable to our cfo.

Why is this so hard?

It's so hard.

Why? Because at Cisco, you've done over 200 deals. I was waiting to say, hey, we figured it out. Here's this framework. We're open sourcing it to the industry so everybody else can reap the benefits of maturity of Cisco's M and A function.

Because it's always changing. One thing is always evolving. I believe it's hard because it's very emotional. It is steeped in people. It's all about people. And people are hard. And you've got emotion. On the acquired side, obviously, we're only buying very successful companies, so they did something right. But there's a lot of egos and there's a lot of. I would say on the Cisco side, it's hard to tell an acquired leader, no, you can't. You will not be retaining that. You've got to do it our way. It's hard because it's confrontational and it's, I think, to make it easier, what we're trying to do is set expectations very early. So the longer it goes, the more you are reinforcing that, oh, what you do is great, so just keep doing it. But that may not be what Cisco needs. And so how are we very clear ourselves with what does integration look like and what are the things you must do because you're now part of Cisco? And what are the things that may have some level of flexibility? Flexibility based on the business justification. And it may not be never. It just may be based on a point in time. It might take a little bit longer to integrate the offer. It might take a little bit longer to integrate the sales team. But you are absolutely going to move out of your building to a Cisco site. And that gets very emotional. Things that you would never imagine. It's back down to culture. Why can't you move out of the building that's part of our culture. Well, a culture isn't a building. A culture is how you connect as people. So it's really hard to get to the root of what really is that culture and how do we continue that? What's inside of a larger company? I believe it's hard because it's all people and there's a lot of them.

Do you think it's more so with the go to market functions as opposed to other functions?

I've had a lot of emotion on all of it. Things you would never imagine. The go to market side of it is just harder because that's the crux of why you bought the company. At least for us, it's the go to market that's at the core.

What about your. When you look at attrition risk, is.

That you prioritize higher on the sales side?

Yeah, usually higher on the sales side. Is it just because they're salespeople and they always see money dangling in front.

Of them And I think so. And they're not very patient. If I talk about. We typically acquire companies that are much smaller than us. We are an engineering and sales company. That's who we are. Cisco. And we have an enormous sales team. And coming into as a small sales team into a larger sales team where you don't own the account anymore is a big change for the acquired sellers. And they're like, hey, I don't, I don't see where my. I don't see where I fit here. I can't make money quick enough like I used to. The attrition of the sellers is what tends to happen for us pretty quickly.

I can see why emotions make things challenging. So how do you realize revenue synergies?

How do we realize. I've already talked about the realist. You Got to be realistic. First of all, you can't say I'm going to achieve a revenue synergy. There's just no way you're going to get there. So I think be realistic. I think being really proving in what you're going to sell and is it light for us is we look at it, is the offer similar to something that we're already selling? The more similar it is, the more likelihood our sellers are going to sell it and their success rate is going to be higher. So similarity to something that we're already doing is important for us. Compensating the seller, compensating them in a way that for the acquired team is similar to the way they were compensated before or at least the total compensation looks similar to what they got before. Enabling the Cisco sellers to sell the technology, if it's something new, how are we really creating the training guiding Enabling the sellers is a big of part, part of it, A big part of what we do is tracking our wins, early wins, early successes and using that to feed additional successes and trying not to blast this out to everyone. As I said, we a lot of companies, and certainly Cisco, everyone wants to work on the new thing. How do we make sure that new thing is managed, it's coveted, it's targeted, we know what we're going to sell to whom, who's going to sell it. It's not that everyone gets chance to sell it and then you can't sell it and then you're like forget it, I want nothing to do with it. You don't want to create that, you want to manage that. And then it's just early monitoring. For us it's really staying on this very, and this is us, my team staying on this really closely watching the sales numbers, making sure that the sales team is delivering on what the sales leader committed to. Because if you start going off early on, you're going to keep going off, you're going to keep going and it's really hard to recover from early misses. That's what we find.

It's easier to sell when you identify these commonalities between the go to market motions. What about going away from the core? How do you start thinking through that and where do you see as the main differences or where the friction points happen?

Yeah, I think the going away from the core always brings up for us what's going to be separate, what's going to be done separately from the rest of Cisco. And so that's the biggest conversation. It's a big dialogue on, okay, why it's not. We need to keep this team separate. We need to do this differently. We need to keep using their ERP system, whatever it may be. It always has to go back to why, what's the reason for that. And I have to say in a lot of cases, there's not really a good business justification. It's just because people don't want to change. And so I think it's really when you're doing something separated from the core or adjacent or proximate in some way to the core, but different, you really have to understand what those differences are and where you can vector from the core and where you can't. You're not going to file multiple tax returns, you're going to file one company tax return. In most cases we don't build out subsidiaries, we don't have a bunch of subsidiaries. So our acquisitions are all integrated to some extent. We do have some that weren't part of the core that are running some aspects of it differently, but over time they do get more integrated.

I'm still trying to wrap my head around how to think about this. If you're even adding. I think you got a good point. It's just it varies so much different between different customer base. Different.

Well, if you have an answer, I would love to hear it. This is hard.

You have to think through it from scratch. It's just such a big variable.

You have to think through it from scratch. I think is what's worked for us is that we do have a model. So we have a model of what is end state integration look like for basically all of our key business processes that are owned by very senior leaders. And when we do an acquisition, we're always saying the default is you're going to integrate, you're going to get to that end state for those key business processes. And if not, we need to have a business conversation to understand why. And there are reasons and why not. You're going to break the sales motion. You are going to lose this new set of customers. So we don't want to transition. Maybe they were selling to competitors of ours that we want to transition and keep this business maybe more isolated. You've got to have my mind, you've got to have a foundation that you can flex from, but you still have to have a foundation. It can't just be. Every acquisition comes in and you're like, oh, now what do we do? It's got to be, okay, this is what our core is. This is how we typically operate. If we have to be agile or flexible from that that's fine, but it can't be. You can do anything you want. That's been honestly a big learning over time for us where when we were acquiring companies that looked just like us, it was easy. You lift and shift, you bring it in and you integrate it. It's done. As we've started acquiring companies over the last six years plus that don't look necessarily like us. They're where we want to get to. You can't lift and shift it because you don't have the business processes to move it into. So a lot of the conversations are. But you could still be on our procurement process. There is nothing hindering from you from doing that. And you're going to get the benefits of Cisco scale, looking at each business process and really defining what does the end state for integration look like as a standard. And then overlay it with the acquisition you're doing and say, okay, does this make sense still for what we want to achieve with this acquisition? It can't be. The CEO wants to keep X, Y and Z that they had before. Why? What is preventing us from integrating it?

That's interesting. I was trying to think of like the tic tac stuff of the certain whatever vendors that provide the office goodies and things like that.

Oh, yes, that's famous in Silicon Valley. Yes. Well, we don't have that anymore. People are at the office.

They didn't virtualize it. Just ship a little box to everybody at home. Yeah, I think that's the next wave on the homegood perks.

It's interesting. I think the hybrid world is changing a lot. Integration because it's really interesting because companies now are. They're hiring talent, wherever the talent is. There's not as much attachment to some of the physical things that used to. People say it's our culture, we bring dogs to work. Old example. But it used to be we're not going in the office, so we're not bringing our dogs anymore. So, like really what is the culture that wasn't your culture. What was the culture that you shared yourself at work? You could still do that virtually. And so let's get back to what really is the culture? Not all of these ancillary things that sort of represented the culture.

You don't like the fluff?

Not so much. It's expensive.

I think for you. You got a lot of things to manage.

We go from one extreme to another. You heard me talk about go to market, technical integration, but then I'm talking about office buildings. We span the whole thing.

You have to be very type A to be in your role, highly organized, highly conscious about time management, slightly aggressive.

And I would say results focused. There's not a lot of the cross functional team members that are corp dev is definitely focused on getting the deal closed. So I would say that is one result, but it's not the full result. We're just always bringing it back. We're like relentless. If you're not delivery, we're your worst nightmare.

So question about timelines being real about achieving. Especially when you're looking at here's a product, it's we're a $10 million business with our two products. This is whatever a million dollar thing. Obviously one plus one equals three because it's so easy to do that where you look at it and look at their year over year growth. You look at your year growth, you combine it and say okay, we're being reasonable here. But there's no dip factors or any of those contingencies on getting things together and aligned. How would you help me think through that in a more of a realistic way?

You know, we're human and we're going to be. We tend to go in pretty optimistic to say, hey, we can do that. Let's look at our data and what we've been able to do. Of course we're going to be able to bring these two pieces together and it's going to be one plus one is three. Part of it is that some of the things we've done more recently is to bring in an external view. So to bring in a third party blind customer survey and go out there and have customers be surveyed on our behalf. Would they buy this? How much would they pay for it? Would they transition from their existing vendor to Cisco? If we offered xyz, we drink the Kool Aid ourselves, It's easy to build that momentum of optimism. But I think it's also important to realize that there's an outside perspective on this. And if you bring an outside view in, it could be very enlightening to what you're thinking about internally. And that's something that we private equity do that all the time. So that's something that we've started looking at.

I think that's the key is validating the go to market as best you can.

Exactly, yeah. And it can't be. Well, I talked to three customers who are already Cisco customers. So of course they're going to buy this. It's like going out there and talking to people who aren't even our customers today. And where do they think this target ranks relative to other competitors. Would they buy from them? And again, it's all blind survey so they wouldn't know it was for us and just getting some of that that data.

So you'd work with a third party vendor to do this blind survey. Is it like an email thing or are they actually talking to people?

They're talking to people.

That's actually pretty cool because I feel like the qualitative data is the most valuable which is why we do this podcast Ebony Science.

But this is not new. This is what private equities do.

They do. I was thinking it's not. It manages an internal effort because nobody going to stop to do that. But having as a third party service makes a lot of sense.

Expensive but depending on the size of the deal you're doing, it's peanuts. It's well worth it. It's worse to make a mistake.

I'm looking for new lines to expand into here at M and A Science. Anybody who's listening or wants to help build some new business lines. I like it.

Very new for us.

It makes a lot of sense because it's one thing that would benefit to have a third party manage and get that information and really understand and start thinking through what's realistic expectations.

Yeah. Because if you think about it, you have your own internal view. You obviously have the target, the company you're acquiring. You have their view, you have a market view because we do market analysis, but you actually don't have that specific customer. We talk to the CIO or the head of the business operations in this company and this is what they said.

Giving me some ideas. I like it. Any other advice for practitioners thinking the first time? Go to market integration. You gave a lot of good stuff. Any tips and tricks?

One thing that we learned over the and companies obviously do it differently is we previously had a business leader making the commitment to the acquisition and they were speaking on behalf of everyone else in the company that they needed to make it successful. Whether it was operations, whether it was sales, whether it was our customer service team, whatever it may be. What we've started doing is that everyone that has skin in the game is part of that commitment. So it's not a senior engineering leader that is committing on the behalf of everyone else and assumes they're going to sign up for it later on. But it's having the sales leadership there and they're signing up for specific numbers that they're going to contribute. It's having the operations leader there and saying, yep, we're going to be Able to have that capability in how we compensate salespeople available by the time you want to, you know, have the sellers start selling.

This is all post close conversations.

No, this is early on. So this is pre, this is pre diligence. We have an early commit. Post diligence. We have the last commit that we make before we honestly get into a definitive agreement. So it's early on. We have the, we have all the players, the cross functional stakeholders. We have their most senior leaders at table committing to this. And it does make a big difference because you're not going back after a business leader that then is pointing fingers. My sales leader didn't make the number. That's your fault. Rather than say, why didn't you manage them? Let's just get everyone to the table and everyone's got to make that commitment. It can't be a sales leader committing and the business leader saying, I don't know if I'm going to be able to integrate the product and have the offer ready for you. Everyone's got to be aligned. And for me, that makes our job not easy, but easier if we have everyone at the table committing to the same thing and then we can then have, okay, let's, we're going to move and get the plan in place and hold people accountable to it.

Have them ready to go at close.

Yeah, absolutely. Because otherwise they're not. Then they're like, oh, I didn't know we were doing this. What is this all about? And you just starting all over again.

Karen, what's the craziest thing you've seen in M and A?

It's interesting. There were a lot of things that I thought were normal prior to Covid. Now coming out of COVID and working honestly in this hybrid world, they just seem crazy. And one of the things I thought of which I was like, God, I can never imagine doing this again on one of our larger acquisitions. I swear we must have had 100, 150 people from Cisco in the room doing diligence on a company. And we maybe had 10 people from the company that we were looking at. You didn't know it was crazy at the time because hey, that's just the way we did it. And now, not just because of COVID but because we're really re looking at the way we work. You'll never see that again. That's just craziness.

Wait, Was it a 10 person company?

No, it was a bigger company.

Okay, but still just 10 people.

Yeah, yeah, but I think that was a norm for us. So I would say that was crazy. But it's crazy because we are totally operating in a different world. I just started thinking about that. I'm like, oh, there's a lot of crazy things like that we'll never do again. You just can't. It's not realistic anymore. And why would you, why would we do that? Why would we spend all that money and have people traveling all the world place you think about it, what we've done in two years of not going anywhere and not seeing anyone face to face for all companies, it's pretty impressive.

That did some good disciplines.

Yeah, no, we did. Because you had to be disciplined. You couldn't sit in front of a video for hours and hours. So how do you make sure when you're doing diligence you're not duplicating questions? You're very clear on what we want to accomplish. The right people in the right location at the right time.

Fun chatting with you. Yeah, Karen, thank you so much for taking the time. I learned a lot about leading go to market integration.

Very good. Thank you for the opportunity, Kisan, and best of luck.

Here's to the deal.

Here's to the deal.

Thank you for taking the time to explore the world of M and A with our podcast. We love hearing feedback. Tag us on a LinkedIn post. Add a review on Apple Podcast. We'd love to hear from you. If you need help standing up an M and A function or optimizing one that you already have, we're here to help. And if we can't help you, we probably know someone that can. You can reach out to me by email Kisan K I S o n a science.com or you can text me directly at 312-857-3711. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com here's to the deal. Views and opinions expressed on M and A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.