Standing up a Diligence and Integration Management Office

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What actually happened during MA deals. Thanks for joining us today. If you're interested in keeping up with the latest From Mascience, visit mascience.com and subscribe to our free newsletter. Every Monday we share highlights from our interviews and invitations to events. We just started doing in person events Again. Come be part of the greatest community of forward thinking M and A practitioners. Again, that's mascience.com I'm your host, Isam Patel, CEO and founder of M and A Science. Joining me today is Carrie Perez, Head of Diligence and Integration Management Office at AMN Healthcare. AMN and Healthcare is a staffing company that trades on NYSE under symbol amn. Today we're going to talk about how to stand up a Diligence and Integration Management office. How's it going Kerry?

Doing great. When I hear it coming from you, that's a lot of words and a lot of acronyms. Today we'll break down exactly what that means.

Let's do it. Can we kick things off with a little bit about your background?

I've been at amn for about 15 years and as I was thinking back about walking through my career path, I get asked that question a lot internally with folks trying to navigate through amn. Where I landed is not where I thought I would when I started. So happy to walk through how I got there, but because it makes sense now that I look back at it.

That's always the fun stories. You didn't go through Ivy League school, went to investment banking and then got your gig at Corp Dev?

No, not at all. I mean, so shout out to UC Santa Barbara. Great school. Go Gauchos. I got my degrees there in Business, Economics and Communication, but my second job out of college was at AMN Entry level sales and recruitment position, essentially taking warm leads and converting them into applications for travel nursing. So it was a great place to cut my teeth on the industry, get to know travel nursing a bit. Then I moved into marketing where I spent a lot of years in our B2C side, basically sourcing travel nurses and all different types of healthcare professionals and really focusing on moving them through the operations to get them onto a travel assignment, which is a lot of what we do. But in there I think marketing was super formative for me. And when I think about where I ended up, a lot of things that I learned there, things that I found that I was passionate about, still hold true today. So the first one there is strategy really just starting with the end in mind, dot connecting, understanding how portfolios work together, especially as you're bringing new companies into an organization, you really have to analyze how it fits in. The second one, as any marketer at heart feels, is that customer centricity, really trying to focus on external as well as internal, but understanding how things affect market and really in my role, how I'm interacting with the new company coming in, that is part of my customer. And then the last one, most importantly is value creation. Sometimes when people think about marketing, it might be a little bit fluffy, some pretty colors. How's just like my branding work? Well, there's a science to that and nothing really is worth doing that you can't measure and that really doesn't ultimately get you to the bottom line. So a lot of that really holds true to where I am today. Another thing with marketing, by the time I was finished there, I had supported every single business line at some point at Amazon and also worked with every single functional department. So I felt like I got a good purview of how things work together, just wide and deep. But one kind of funny story of how I actually transitioned. It's a Wednesday evening, 9pm I get an email from our chief talent officer who I hadn't spent a lot of time with personally. Septic line says, can you talk? The body has nothing. I'm racking my brain thinking about like why am I getting fired right now? But ultimately had a conversation and she said, hey, we are actually about to acquire a couple companies in Boston. How would you like to leave your role, move there for six to nine months, work alongside that new company and lead the integration? I was thrilled at that opportunity. It wasn't completely foreign. I had been a subject matter expert a few times and some other integrations, but really it was a trial by fire. I Had some great mentors and great people to bounce ideas off of. But talk about jumping in feet first and really learning on the job. It was one of the best experiences, both like personally and professionally. Cut to move actually to Dallas originally from San Diego, work on a couple other integrations, some diligences, some things in innovation, and then I get a phone call from a former colleague to try my hand at Amazon. So went there and actually went back into their marketing department. Learned a bunch. I mean talk about a company that's focused on customer centricity. And then I get a call from our CEO at AMN and our Chief Strategy officer saying, hey, we are about to close on the largest acquisition that we've done. We're in the middle of integrating our second largest acquisition and we've got two others on the way. How would you like to come back and head up a new office, the Diligence and Integration Management Office, and then also work on enterprise strategy? And so that's where I am today.

Wow, that's a journey and a half. I like how it starts with the nursing component because some people say there aren't good headed people in M and A. And then you just went through the different roles, came up through the marketing function and we're going to get into is running this whole diligence management office. Can we talk about what prompted your company to stand up and you referred to it as a demo, right? Yeah, Diligence Integration Management Office, I think even before that we should probably define that because a lot of folks in corporate development are very familiar with, I think originally is a pmo, then we beefed it up and call it an imo. Now we got another acronym and it's a demo. Yeah. Can you maybe elaborate what's the difference.

With the Integration Management Office? The imo, it traditionally starts maybe a couple weeks before close and it's really focused on that function of integrating. What we saw, especially at AMN and I think even in some of your podcasts that you've had recently, that importance of getting up front early through diligence and diligence, the act of diligence is obviously assessing the company that you are planning to acquire to make sure that you want to acquire it, the risks that are there, the value that you expect to create. And so we really felt like this function of combining and having that continuity of someone being able to oversee both the diligence and the integration made just a lot of sense to have a handshake. So you asked initially like the why AMN decided to Start the demo in general and even just to have it as a centralized function. Now I mentioned that I went to Boston to run some of those integrations. The other time I had another colleague from finance and he went over to Florida. Through that, we both recognize that we were approaching things differently. Nothing was better than the other. But it really did show that in order to be scalable and repeatable, it makes sense for this function to have some continuity. So that's like first and foremost, if you want some repeatability, you want some scalability. Have somebody who is dedicated, who can pick up the learnings from integration to integration, from diligence to diligence, and be able to just refine that process on the diligence standpoint. Some of the things that I think are really important coming out of there as you're bringing it into integration, a phrase that I like to say is the better the diligence outputs is the better the integration inputs. There's a lot of things that happen from there that you pull forward. There's some of these nuances that happen in the conversation that don't make it to a diligence memo, but are really important for both the new company that you're acquiring and your internal team members. You got an example, let's say you're talking with a more entrepreneurial tech company and they built their CRM from scratch and they're very excited about it. They're maybe a little bit protective of it. They're maybe a little bit worried about it changing. Understanding the kind of sensitivity around the impact, that's somebody's baby. And it can be easy for a larger company to come in and just make an assumption like, oh, great job, but we're moving to our technology and not really have that sensitivity or that change management to bring people on board. Or maybe there's a discussion that happens of what will or won't be in scope. Like we are not touching their branding for six months. So let's not talk about that. Sometimes those little things that don't necessarily make it to the diligence memo, that are more about that personal change management thing, that's a little bit less concrete.

That makes total sense. I want to get a whole picture of this actually stepping back because a little bit different here. And I'm thinking the traditional we got a corp dev team, they usually run diligence and things of that sort. What does that look like in your company? You have still a corp dev function and then now you have this diligence integration management office and they carry Things out through there. What does that look like is separate is all combined.

We technically don't have a title of corporate development but I am in our strategy department and so we've got our chief strategy officer who fields a lot of M and A along with myself. We're very close partners and so we will be working from from the onset even if we've got inbound opportunities from a banker. We're partnering to take a look at the sim, work with our finance team for valuation and bring in a whole cadre of people to help with that diligence. So it's a small team who's dedicated, but we've got a lot of other team members that come in that are dual hatting with their day jobs to help with the diligence and then move on to the integration. So small team, dedicated, but a lot of people involved.

Where does the demo step in right.

Now the demo I'll represent as like myself and then depending on what deals that we work on, it's who we bring in. I step in from the very beginning, from the time that we are working with our legal team to sign an NDA to be able to talk with the new company, to the on site management meetings where we're doing our kind of meet and greets with the potential acquisition, to working with our finance team to look at the quality of earnings and understand the makeup and composition of the projections of value to then the actual diligence, to close to then integration to a year later having that readout to the board of what we accomplished. So right from the very beginning, it wasn't like that from the start though we still were trying to find the right balance of when to bring this function in. And it just became clearer and clearer that those little things that you pick up in a hallway conversation or during lunch when you're talking with the other management team, it just helps with that continuity. Not even just the continuity, but it helps to eliminate redundancy too and just become more efficient when you get to the integration. In a couple examples, especially when you're working with a new company that might be a little bit smaller, they wear multiple hats, you don't have parallels of functions. Might outsource their HR department or their executive assistant might also do their books. You have to realize and going back to that customer centricity, put yourself in their shoes and have some empathy with the fatigue that comes with diligence. It is not an easy process. Hundreds of line items of things. So if I'm able to help capture synthesize pull up the most important parts. It really alleviates for the new company after we close, going into integration and saying how's your sales model work again? Or how do you make money? Those things. I just got finished. Go in the data room, you've got 30 pieces of material there. Please don't make me say it again. So it's the efficiency of being able to hit the ground running with integration. But then it just, you're the first experience that you have with the new company. It can make them feel welcomed or it can make them feel just like another asset.

That's a common thing that organizations have where it's handoff. You don't get that quality of knowledge transfer and then you end up having. And then even large scale companies that have many, many functional work streams that are requesting overlap of information. This is a good example of the value of having that continuity in the process and so forth. More questions just to understand the team dynamics over there.

How many deals a year like everybody, it depends. But I'd say on average do between 1 and 4 to 5 depending on the size. It does go to speak with why you need to be scalable because a lot of the same team members are working on the same deals. So when you are needing to prioritize it really helps. And part of the function of building up the demo was streamlining who was involved. So starting in diligence you have a little bit of the luxury to have a lot more people involved. You've got a quick timeline in which you really need those specific SMEs to analyze their portions of the diligence, contracting out or legal to review contracts and things like that. So you could have upwards of 30 to 40 people in there. One of the things that I wanted to do in standing up the diligence and integration management office was let's streamline this down to about nine functional leads. And they are going to be the ones representing their departments. Yes, they're probably going to have to go back and work with. Team members are not expected to know everything. But let's have this core group of people who hopefully from deal to deal are the same people involved every time. I'm sure many companies can relate to having way too many things to do and having to fight for prioritization. It really just helps having this small group too in that recommitment to the sacred nature of integrations, getting that buy in from leadership first and foremost to say does this fit in the spectrum of what's important? And do I now have that kind of clearance to work with the teams that are going to be involved in integrations and say, hey, when it comes to a tie of this meeting or this meeting, you're going to come to the integration meeting. You just are able to move so much more nimbly when you have a smaller group versus kicking the can down to the next week because the decision maker, one of 30 people, wasn't in the meeting that day to make an integration decision. So that was key. Having a small group of people who could move from integration to integration, who were committed to the sacred nature of integrations and who are able to iterate. As you get those lessons learned and understand how the pieces connect and come together each time versus somebody coming in and needing to reinvent the wheel each time because they happen to be free.

You're really building elements of a center of excellence into this office. You're standing up. The integration leader is important to execute all this stuff. What does that look like? How do you pick that person? Who are they?

Evidence by how I learned a lot on the job and by listening to podcasts like yourself and reading books and looking at materials. You do have to have some raw materials of a person. Critical thinker, strategic, able to be organized, connecting the dots. But what I think is the most important are really the soft skills for an integration lead. It's that interpersonal relationship. It's somebody who can be an assertive self starter but also an independent thinker and like, most importantly though, can work well in a team dynamic. Most people involved in M and A, you can correct me if I'm wrong, but I don't hear a lot about like big, huge, dedicated teams. Oftentimes you do have to manage their influence through credibility. So somebody who can have that. There's a likability aspect as well. You have to earn the trust of a new company coming in very quickly. So it's somebody that you want to go grab a beer with too, or have a cup of coffee. It's not the diligence and integration management office of best friends, but it's certainly easier to row in the same direction when you want to get in the same boat with somebody. So I think there's that interpersonal aspect.

Where are you sourcing them from? Is it from a business unit? Is it external help?

Right now we are borrowing from our CMO office, our project management office, and there's certainly a lot of project managers there. The next evolution that we do want to have, have, and they're fantastic. But going back to that continuity, the next iteration is we do want to hire a full time role in the demo that can move from integration to integration and for the same reasons I mentioned earlier. But yeah, sourcing externally and internally. There's pros and cons to both. There's the ability to navigate internally, which is super important, especially at a company that has so many business lines. But then it is nice to have kind of that external experience for somebody who has been around the block a few times from M and A, especially for amn, as we move more into kind of like a technology realm and not just our kind of bread and butter staffing which we're kind of grew up in.

What's your role in this whole process?

Going back to where I start to get involved, I really do oversee all of the portions of it. I've been leading the management meetings when we go on site and giving the toast at dinner when we're breaking bread, getting to know each other, to partnering with our finance team to gut check our valuation and the multiples that we're considering. And then ultimately the chunk of it is really giving the kind of guidance of how this company that we're acquiring will fit into our enterprise strategy, unlocking where that value should be by joining AMN and then going through the diligence and integration with that lens in mind of ultimately the value creation. We do have a great benefit of being the largest in our industry. We have a lot of deals coming to us, but we have several business lines that myself and our chief strategy officer works with. They're the closest to the industry and so we'll work with them to hear what's coming to market, what's of interest. But ultimately it starts with our enterprise strategy and understanding where do we want to be in three years. Our mission is total talent solutions. So we look at things going back to customer centricity of what's going to help our clients and our candidates. We come up with our short list and then we look at it as a team sport and work with our internal experts and our external experts to whittle down the short list of our targets.

I was hoping you were going to say that you do it because then I was like damn, Carrie does it all.

Certainly part of it. There's a lot of fun crunch based research going on and evaluating the landscape in the marketplace and having some of those discussions, but there's so much going on. It is hard to be so aware of everything that's coming to market.

I wanted to dig into, I hear this representing the voice of Corp dev folks right now, the handoff between diligence and integration tends to be where things start going in a different direction at times. What are the things that you pull out up front in your diligence to integration handoff?

Yeah, that's a great point. The diligence memo itself is quite hefty. As people probably know. You were talking 30 to 50 pages. There can't necessarily be that expectation that everybody coming in to do integration is reading that thoroughly. So there's a couple key things that I like to pull out. The first one is just really understanding what the integration type is. Is this a deal in which the company needs to be fully absorbed? That is one type of integration where the roadmap becomes a little bit clearer of what's going to be fully integrated and what isn't. Is it going to be something that's a little bit more symbiotic, for lack of a better word, in which there needs to be some autonomy from the new company coming in, but some from the mothership? So understanding that and getting the agreement up front with our leaders of yes, that's the type of integration we're going to do really does help outline the rest of the scope. The other things of course are the synergies and the targets. Why are we doing this deal in the first place? Getting clarity around what sort of value we hope to create. Not only is that important because it really keeps your eye on the prize of what your scope is, it also helps you understand what the scope is not. A lot of times new companies come in and we get so excited at AMN that it's like, oh my gosh, yes, we're going to pull them into this meeting and we're going to sell that. No, like this first year, we're only focusing on continuing to establish their product market fit. We are not doing this full integration into our integrated sales team. So those kind of synergies and what we will and won't do, then maybe some of the constraints and assumptions like we are assuming that they are going to be sunsetting their brand or that we are going to be not actually integrating them for a month because they have the diligence fatigue. KPIs, some of the key KPIs, of course we talked about value creation, whether it's revenue or cost synergies. Retention is obviously a huge one for the new company coming in. And then one thing that I am still trying to hone in on, but I think it's really important. A big thing we always say when companies are coming in is we want to do this with minimal disruption. Like what is that? And how are you actually measuring whether you are disruptive or not? Let's be real, you're always going to have some disruption. But if you're able to work with the business and say, hey, if this leading indicator starts going down, if my minutes per user, that means something's going off. So that disruption metric I think is really key. And then of course the normal stuff you've got going on, scope, budget, any key decisions made and it's literally a four page document that gets handed off to the integration team. I almost want to put together a module in which I can test and be like, did you read this before going and talking with the team? And that way you kind of ensure the heart of what's important gets pulled up. You keep your eye on the prize of what you're supposed to be doing or what you're not supposed to be doing. And then wrapping that all is the change management and cultural experience that you're hoping to have with the new company coming in.

Yeah, a lot to check off there. I like how you laid out the strategy of the synergies, laid out the KPI's strategy. Synergy lends to your approach and the integration thinking through about what you don't want to break. I actually got asked this the other day about designing organizational leadership structure when going through all of this, can we walk through that? Because that's a question that does come up and I do find it interesting because it's pretty unique company to company.

When it comes to Org design, especially when we talk with senior leaders, that is really understood even during the diligence discussion in collaboration with the new company. So understanding who is wanting to stay on where they're going to be reporting to, what their titles are going to be, that all happens with trust and transparency. During that diligence process prior to close, there's also discussions of functions and where they end up absorbing or not absorbing into the organization and that one is key. We certainly partner with our HR professionals at AMN to lead that part of the process. But the sooner that people understand where they're going to sit, the better. The uncomfortability of the unknown can definitely freak people out unless you give them that clarity early on. So going back to what type of deal it is really does help dictate or inform what the org design looks like. So let's say we are purchasing another staffing company that looks very similar to staffing companies that we have and we're really just Adding on additional clients or additional candidates. It's pretty clear that's going to be a full absorption model and those team members will be coming into the fold and joining our enterprise and joining our sales teams. If it's a new type of deal in which maybe it's a technology company that has a unique selling point, it's someone that's going to lead us through the market with their brand name, then there's kind of decisions of yeah, continue with your sales team, with your product team and we will find those points of synergy where it makes sense to a help you be the most effective coming into the organization. What can we take off of your plate and then B, what's going to make the most sense for our long term strategy of as it is at AMN becoming one AMN to serve the most for our clients.

Building on that, when we think about the actual governance of the integration itself, you obviously have an integration lead, but there are other components to that. How do you hold accountability for these APIs and things to get executed on.

Standard monthly steering committee meetings, But I guess the structure in which we engage, we typically have a weekly meeting with our nine functional leads in which we are pulling from the initial, what we call kind of grocery list integration tracker of the expectations for the milestones that they're supposed to be hitting. And we just simply review that periodically. Yes, we do have a red, green, yellow system. We've got a percentage complete. But we do then partner very closely with the business owner at AMN in which the business is folding into the business leader coming in from the new target to analyze monthly, if not more frequently, where we are to target and then they get quickly also folded into our normal business unit review process at AMN as a whole. So we're keeping a close eye on their financial targets and things like that. It's really governance through setting out the expectations and just the accountability of meeting by meeting what progress we're hitting and where we have risks.

Who's on the steering committee?

So steering committee includes our functional leads because they get to speak to the nuances of what's going on. They're more participating in speaking to the steering committee, but we generally have our chief information officer, our head of HR strategy, the business unit, and then on occasion we will also be reporting out in a separate meeting to our CEO and our finance, all of our C suite, but that might be more of an executive readout versus the steering committee that happens monthly to guide it. But the key people are the business leader on the AMN side, the business leader on the new company side and depending on the type of integration, those other key executives that have the most involvement in the integration.

Does your integration fluctuate? Do you always fully integrate companies? Are you keeping stuff standalone?

Going back to the type of model it is really does help to inform that if it is fully absorbing into something that looks and walks and talks similar to something we have going on versus maybe a new technology company. What's interesting in particular right now with AMN, after 35 plus years in business over 30 something acquisitions, we are really seeing the pros and cons of when we have fully integrated and when we haven't. It goes also back to the standardization of the demo. Depending on who's involved prior you might get a certain level of integration. And right now we're really on this kind of mission to make us be more 1amn. So our systems at least fully talking to each other, our data mastered, our go to market strategy, a little bit more unified. So to answer the question directly, I think there's been times where we haven't fully integrated and we thought that we had. There's been times where we have said hey, let's leave them alone for a bit, we'll get to that later. And right now I think we're doing that full inventory of you know what, as we move on, let's integrate the most possible where it makes sense for value creation. That really does go to this concept of what I like to call base integration versus beyond base and base integration we always do. It's those functional areas we're going to get talent acquisition coming through a central place. We're going to make sure our GAAP principles for accounting report out is unified. Anything that needs to happen to join a public company we're going to do. But then the beyond base stuff sometimes I've noticed doesn't get captured as an integration line item, but it really should if you want to get that value. Some examples I've mentioned are like mastering data. We want to be able to do good customer segmentation. The branding is just how initially our clients and our candidates are perceiving us. That hasn't always been something that we initially think about to integrate. And as we get further and further more complicated with the more integrations that we do, the more we recognize that integrating to the most that makes sense is really important.

There are no shortcuts when it comes to integration.

Totally.

I want to walk through the timeline and this is particularly thinking of people new to M and A learning M and A we've been talking a lot about building out ways of simulating M and A. Can we walk through just a timeline? You can even pick an example deal and let's just walk through the stages of where it goes, who gets involved, what's happening, you know, make it tougher for you if you got any tips along the way.

So let's maybe take an example of a company that a banker has come to us and they're interested in coming to market. So at that point there's a small team that comes together. That inquiry probably goes to myself and our chief strategy officer. Depending on the type of business line that it is in, we'll usually pull in the group president from the AMN team, a finance person and a legal person to talk about are we interested in this company at all? So we'll try look at maybe some of the information that was sent over from the banker, some of the finances expected 8 million EBITDA with a growth rate of whatever in the next three years. And we evaluate and try and take a look. Is this something that we're interested in pursuing? So let's say we are interested in pursuing. Share that back with the banker, work through with our legal department to get an NDA signed and start pulling the small team together with what are the questions that we want to ask in order to really get that short list of yes, we want to pursue with an IOI or no, thank you for your time. We don't no HR yet, no HR generally yet. @ that point we may or may not even know who the company is. We're working with the code name still. Maybe we have a few ideas of who it might be around.

That one page teaser pretty much.

Yeah, exactly. Got the one page teaser. Then we signed the NDA and at that point there's probably some arrangement of getting the sim, the confidential information memorandum. We're evaluating that. We pull in finance a bit more to understand valuation expectations, understand the composition of the EBITDA contributions, the go to market fit, things like that. And then generally there's going to be some sort of management to management discussion. Ideally you do that in person. I have noticed there's a lot of stuff that's gotten done over zoom totally happens. But there's nothing like I feel like sometimes being in person with that group. So at that point maybe the team expands a little bit more, but you're maybe talking between five, seven people representing some of the key functional areas that are really germane to the business. So we organize ourselves to understand the type of Questions. What are the key things that we've either been burned on in the past or it's new to us, it's new market expansion that we want to understand a little bit more, generate those questions. And maybe at that point there's a small data room that's been opened where we can peruse some of the materials, go on site. Hopefully in a key part I mentioned this culture stuff, you get the opportunity to maybe do something social, have a dinner with each other, have lunch, really get to know and open up with the cultural fit. That's a lot of the thing that we're also trying to understand. So at that point, you go back, you do an assessment with your team, yes, you want to move forward. But here's the key areas that we want to hone in on. Generally at that point there is an loi we are going through looking at the QOE of what our valuation, what our bid is going to be and hopefully we get down, selected and ultimately we want to be in an exclusive diligence with the organization. At that point you bring in the larger team who's going to be responsible for analyzing the data room. That's where you could end up with 30 to 40 people going in there. We set up our bi weekly meetings. Usually we're trying to get something done within 30 to 60 days depending on if you have to go through any sort of regulatory. I'm probably going into way too much detail, but I know that you've got some students on the phone too. Maybe you haven't walked through it, but essentially at that time you get to the decision of was our evaluation correct? Have we learned anything that's going to.

Be a showstopper that LOI or pre loi still.

We're at LOI now.

Now we have, we have a signed loi.

We have a signed LOI now we're.

Moving into confirmatory diligence.

Exactly. Moved into confirmatory diligence.

Troops and armies are fully deployed.

The masses have assembled. A lot of times they're still dual hatting with their day job. So a lot of respect for these team members coming in and really just getting focused on working hard. One thing that I'd like to maybe take a look at, we do the same amount of diligence for a $2 million deal as we do for a $500 million deal. One could argue maybe there's an opportunity to slim that down, but there is generally something in that 11th hour where you're like, wow, I'm really glad we pushed for that line Item with legal or risk or finance, for instance. So go through confirmatory diligence. At that point you're bringing in maybe your corporate comms team to start talking about, close schedule developing all the communications, deciding whether you're going to have a press release, is it going to be joint with the new company, getting any stock purchase agreements settled in doing the things that we talked about before with titling and roles and starting to maybe pull in the integration team and talk about how we're going to do this. You get to close all those day one activities happen. Hopefully there's a nice celebratory dinner involved. And then typically within 30 days we want to have an integration summit and that's usually in person. And it's an opportunity for the new company to really get the lay of the land for amn. We have the functional leads, meet each other, talk through what they learned with diligence, talk through the integration plan. And it's that first intro where you really just get to understand how to work with each other, build some shared goals, hopefully have a few laughs and get to know each other's kids or something like that. Just getting a little bit more familiar and then ultimately kick off integration and run that through.

That's a lot. That's a good details.

Yeah, it's a lot.

I wanted to touch on the diligence and integration team because it seems like there's different bodies that have ownership of that. And what does that look like when they're working together pre loi. How does that work?

Yeah, most of the time. Luckily a lot of the folks who are in the diligence process do carry over into the integration process, but it's just Streamlined. I'd say 90% of the folks who are in diligence also are in integration. So you do get to have that continuity of people carrying over. They're just now more responsible for the rest of their department.

Would you say that while they're doing diligence they're already starting to think of how this is going to pan out when they integrate the company?

I definitely think so and we'll do that in our bi weekly meetings. We have to be careful from a regulatory standpoint. Never starting to integrate prior to close, of course. But we will highlight in that output of that diligence to integration handoff of. Oh yeah, we're going to need to mark that. That's a major risk. We saw in diligence that there's a lot of contractors and countries that America has deemed that we're shouldn't be working with. So we're going to need to figure out how to supplement that as soon as we get into integration. So they're certainly building the integration as we're identifying the areas within diligence that are either going to help us create the value quicker or mitigate a risk quicker. And those are the things that kind of bubble up and help you do the air traffic control of that decision. DRUMBEAT OF what do you do first? I've heard it several times. You can try and think of as many fun metaphors but run into some walls. But you are air traffic control, especially as you're working with a new company that's smaller and you don't have those same functions that you do at amn. If they only have two runways and we've got eight planes, you really have to orchestrate who's landing first. So it's project management, but it's also sensitivity to what a new company can handle. And that really does start with those key things that have to happen first.

From diligence, automating parts prioritization and mindfulness while keeping others in mind.

Yeah, and also it's important for our internal team members. The more you can be clear with them of what decisions have been made, what will or won't happen, the less they have to spend time getting up to speed and asking those questions. I think part of also bringing the demo together is what I recognized. There's sometimes decisions that kind of get kicked down the line. Okay, that's an integration problem. No, we need to understand if we're going to move from their platform to our platform pretty early, because then it just gets a little bit gnarly when you're in integration and you just have people who are trying to do their job needing to field really sensitive conversations with leadership. Help to take a little bit of the onus as well off of people who are really just trying to support their function and get what they need to do done off of their checklist.

Now we're going to turn it up. I got a good question in Q and A here around running parallel integrations. You have any views on how to manage multiple parallel integrations?

That is difficult, especially when outside of parallel integrations, you probably have 15 other strategic priorities that are going on. From a very tactical standpoint, just to start, I don't know about you, but I've got like meetings back to back. It's really just trying to analyze what are those key points of time where you need people to actually be at a meeting and don't try and have overlapping meetings. Let's just start there. So it's really understanding the peoples involved in their time, starting a little bit more macro. It really does get to the agreement with your senior leadership of what that prioritization is. And if it's priority one, five and seven, that does help you dictate what comes first and what's a pressing priority. And then as you are developing the plan for your integration, I like the concept of what's called like a decision drumbeat. You don't necessarily have certainty of every single output that's going to happen, but you do have clarity of what you need to do. And if you're able to spend the time up front understanding those key decisions that happen to be made in order for the rest to unfold, you're able to then map out how you involve people's times and at what point. The thing I hate the most is wasting people's time. So if I don't need to pull in finance until three weeks later to focus on this deal, go ahead and sit out the meeting for integration number two. I know that you're working on integration number one, so that upfront planning and understanding the decisions that need to be made and how you're going to orchestrate them, as well as the just understanding of holistically of people's time, helps you at least be a little bit more organized to be able to deal with those parallel integrations.

Sounds like you need a whole playbook on resource management to manage all that.

Oh my gosh, tell me about it. It's like capacity planning for everything. And from my purview too, in also enterprise strategy, there was a question you and I had talked about. What's the most difficult thing about running a demo? And it's not necessarily the demo in isolation, but it's the making space for it when you know you already have a full plate with the rest of your strategic prior as you're doing strategic planning with your business leaders. There's the question that we posed this year of how are you going to make space for the unexpected? Oftentimes you don't necessarily know you're going to make that acquisition. You can come to the very end and you think you're going to close and you don't, and you can't go clear the plates for everybody else and stop what you're doing. But the most difficult thing is making the space so you can have the capacity and resources to do what you need to do from a strategic perspective to keep that North Star that that three year plan going, but also then take this new impetus into your DNA and figure out how to make it work.

What's the biggest challenge you come across when you're managing a dmo?

It is that kind of resourcing and that prioritization amongst all the rest of the things that you need to do to keep your organization moving to that three year strategic goal. But then dealing with this brand new thing that came in where it's stop the presses. Am I still going to do that thing that I just spent three months planning last year and strategy? So it's. And it's really then working with the teams to be like, what is the least amount of people I can work with to get this done the most effectively? I don't know about your experience, but I think sometimes at our organization being involved in something is a badge of honor and you want to be. And I would love to talk a little bit more with our team about, man, if you can get out of a meeting and still get what you need to get done, take advantage of that. Really just streamlining what can get you to 80%. And then if somebody wants to bring somebody else into a meeting to advance it, it's like, is that going to give me an incremental half a percent, 1% more to execution or is that going to give me that 20%? It's only going to give me 1%. Hey, we'll work on what you're needing to do. We'll keep you posted and we'll bring you in when we need to.

That's really great tips. Got a good question here from Amanda. She's asking what are some good books, resources, groups for a new integration leader. I accepted a new role as a senior integration leader in January. Coming from aviation Project program management for 10 years, looking for a foundation to build my career. Now with this new role.

Great one. One book that actually was published in 1991 but still holds a lot of truth. It's called Managing Acquisitions. Creating Value through Corporate Renewal. The authors, I think it's like Haspla and Jemison. It really does walk through step by step, the value creation, all the angles of acquisition. And it was a great kind of bible to me. My recommendation is like read through that and then look at it through the lens of the company that you're in and understand what makes the most sense. It's a thick book, but there's still some kernels and foundational things that do not change regardless of the market. Obviously M and A science, you can't go wrong with this. There's tons of great resources here and then I find a lot of good articles. I referenced the decision Drumbeat Managing creating value from McKinsey and Bain and Company. There's a lot of great stuff. The Google machine has been a great friend and understanding. And then I like to try and do networking on LinkedIn and see who else is in my field and kind of join whatever webinars I can learn from. Oh, and also creating shareholder value. Got a book up there about valuation, but also maybe take a look at where you think you have the most experience that you can leverage. For me that was marketing, it was customer centricity and it was understanding the flow from beginning to end. Although I do have a degree in business economics, it's been a little bit rusty for me to apply that into the full understanding of valuation. But that's very important, very important to understand how things work. And so I took a class through Columbia Business Extension around accounting and finance principles with a specific evaluation to really just brush up on some of the jargon.

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

Whenever I watch people answer this question, they always have to caveat it with well, I can't name any names. And that still holds true here. And it might be something that I'm sure other people have experienced, but I think for me it was the first time I had seen this. We had obviously agreed on a purchase price. It had come down from our initial LOI based off of what we had seen with their financial models or with the things that we had seen in diligence. But that was agreed upon and the management company was coming out to celebrate in Dallas. It was a couple days before close. The timing just worked out. We normally don't do that dinner before we actually close, but we were breaking bread having our six course sushi dinner, really just starting to get excited about integrations. The next day they called and they said, yeah, we want X hundred more million dollars. We're about to close and ink the deal in a couple days. And I think they either a expected us to feel so far along the process that we would do anything to close the deal, but we walked away.

Wow.

To kind of go through that entire process and get to that point and ended up being a really probably a good thing for us just looking at where that company ended up. But that was crazy for me to witness just being that close to a deal closing and maybe having someone overextend their poker card a little bit. And for us to have that discernment to be like no, we understand the value that we're looking for and that's not going to be it.

Wow. What happened to them?

Well, I'm sure they are doing great without getting acquired by anybody else, but I think think they've had a few challenges in some of the new market that they were planning on going into. But wish them the best obviously.

Absolutely. Carrie, thank you so much for this conversation. I enjoyed it and learned a lot.

Great. Thank you Kisan. So great to be here and looking forward to following and hopefully coming to Dallas for your next roundtable.

Oh absolutely. This is kicking. That was just the beginning. We got to do live events, in person networking events. We're calling it MNA Science, Corporate Development, Social Media.

Love it.

That are in house corporate development roles. We have a ton of little online and now in person roundtables. Kerry, thanks so much and here's to the deal.

All right, cheers. Here's to the deal.

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