Structuring Talent Focused Acquisitions

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That was my lovely daughter Shyla. If you want to keep up with the latest on M and A Science, our live streams, networking events, when we release new resources, visit mascience.com and subscribe to our newsletter. You can Also follow our LinkedIn page to catch highlights of our interviews and if you like our content, please tell a friend so we can keep growing our community of forward thinking M and A practitioners. Now on to the interview. I'm Kisan Patel and you're listening to M and A Science where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals. We take lessons from real practitioners and enable them through our Deal Room platform. In this podcast series, we interview leading M and A practitioners to share lessons from their experience. Learning proven techniques is key to optimizing your M and A practice. If you're interested in learning more, connect with us at our networking events and access our educational resources@ma science.com I'm your host Kisam Patel, CEO and founder of Deal Room. Spent 10 years in M&A visor and after seeing a slew of industry wide challenges in 2012 I decided to pursue the dream and build the greatest software to manage M and A. Joining me today is Christina Ngaro, Head of Corporate Development at jll. She's a corporate and business development leader with proven success helping companies transform and grow through acquisitions, divestitures, investments, joint ventures and partnerships. Thank you Christina for joining us today. I'm thrilled to be having this conversation with you. One of the values in doing an acquisition is really an opportunity to enhance or level up an organization's talent. How should organizations structure talent focused acquisitions? But first Christina, can you describe your role and your organization?

Thanks for having me here Kisan. I'm currently the Head of Corporate Development at JLL and I oversee all of the mergers and acquisition execution in the Americas region. For those who are not familiar with JLL, JLL stands for Jones Lang LaSalle. We are a global commercial real estate services and advisory firm and we principally provide brokerage and Sales, advisory, project management, consulting and outsourced facilities management. By and large, we are not generally a developer or owner of real estate. We advise clients on their real estate matters. And so when you talk about acquisitions in the context of jlon, when I do, I'm specifically referring to the acquisition of other real estate services firms.

What is a talent focused acquisition?

So a talent focused acquisition is largely a services based acquisition. And I think the hallmarks of, of a talent based acquisition are it's a situation where you're acquiring people, you're acquiring people for their skills, their domain expertise, particularly in the areas of consulting and advisory, and their client relationships, particularly in the areas of brokerage. As you can imagine, JLL being principally a services based organization. Most of the acquisitions we do are talent based. But like other firms, we too are on our digital journey here and interested in looking at some technology based plays as well as. But for today we'll be talking about talent based M and A.

What are the key criteria in assessing an investment in a talent focused acquisition? And if you can describe how you would do the diligence?

When we look at a talent focused acquisition, we're looking at initially a lot of the same things we would for any other acquisition. Understanding the business model, the historical and projected financials, revenue, profit and so forth. So all of that is table stakes. But I think what makes the talent based acquisition a little bit more unique is we're really digging in on understanding the employees and the culture. One of the things that we are particularly attracted to are situations where the employees of the firm are also the owners of the firm. And there is really strong alignment there which enables us to do some things with purchase price and earn outs to create incentives going forward. We also want to look at how committed the employees are not just to a sale, but to continuing on as employees of JLL post closing. And that's pretty critical. And so we would not be interested in a situation where a group of folks are looking to just cash out and retire. That would be pretty hard for us to get value out of that going forward. Very important that we have that commitment so that we can realize return on investment overall.

So make sure there's an ongoing career path for the leadership involved.

Absolutely. And the leadership as well as all the employees. And, and that there is also a good training and development model in place as well. Because not everybody is going to be there forever, not everybody's going to last forever. And we need to ensure that there is appropriate processes in place for knowledge sharing and training.

How do you Approach planning the structure and valuation of a deal, recognizing that.

The value is really in the employees and the biggest risk is that you do the acquisition and then as soon as you close, everybody leaves and you're left with nothing. So that's the risk that we're always trying to minimize in how we structure the deal. From a valuation perspective. We still employ a very revenue and cash flow based valuation methodology, but how we structure that valuation is going to be different. For a talent based deal, we tend to pay purchase price over time rather than all at once and we use earnouts quite extensively. Now everybody's got their horror stories about earnouts. I'm proud to say by and large they've mostly worked for us. They've mostly been win win. We of course have some scars as well, but they have been a very effective tool in talent based acquisitions to creating that incentive for the owner employees to really drive growth going forward. And then of course we also use retention mechanisms as well. Both time based and performance based retention compensation models.

Do you have any tips or keys on how do you make an earn out successful?

Try to imagine every possible scenario and plan for it in the purchase agreement and then you'll still miss something. Really got to get that crystal ball out there. But I think for us the key has been in our the way we structure earnouts has evolved quite a bit over time. And I think the biggest area of involvement has been making sure that we are holding the acquired business accountable for things that are in their control. So that's really important to folks coming on board. They don't want to be measured on things that are well outside their control, like corporate allocations and expenses that they have no visibility into. You have to find a way to integrate but also ring fence the business at the same time. That can be a tricky balance and making sure that the earnout is aligned with what you actually want those employees focused on day to day align the.

Earn out around the variables that team can actually control.

Exactly.

Good tip. Are there ways in which building a talent focused structure could be leveraged in other industries?

Absolutely. So I think talent based M and A is really applicable to any professional services or business service firm, consulting firms, advisory firms, interior design architecture, you name it. So anything that falls in that business services category is going to largely be focused on talent and they're going to likely employ similar structures and models to the kind of things that JLL does. I think in the world of technology there's talent based M and A and it's more frequently referred to as Acqui hires frequently see software companies and technology firms acquiring talent. But I think the distinction there is in business services, you're acquiring that tal for exactly what they're doing today. In the technology world, you might acquire that talent and redeploy them to other projects or morph the IP into something a little bit different. It's really, you're using it as a way to get access to great development skills typically. But what those people might be doing post closing is more often than not looks a little bit different than what they were doing pre closing.

And what does that mean in terms of repurposing the team that you're acquiring for different projects?

Yeah, in the technology world with an equi hire, it's often an acquisition of a team and maybe plus some intellectual property. The intellectual property maybe is interesting, but they were not able to monetize it or really turn it into a business. And so the acquirer often will either sometimes scrap that intellectual property completely or take that intellectual property and build it into something else that they are building internally as a way to accelerate development. And so the team, the acquired team may or may not continue to work on that ip. More likely they're going to work on something bigger. So when Google and Apple and others make these types of acquisitions, they've usually got big projects already underway that they need talent for and they'll use acquihires to go get that.

Now if you're not going to utilize the ip, are you actually putting weight on that in your evaluation?

I would think in those situations, not so much, no. You're going to be really looking more at hiring costs as your opportunity cost. And then the deal structure itself is going to be more heavily weighted towards retention, maybe earn out if there's a way to measure revenue going forward in some discrete way. But these deals are often very focused on an acquisition of just of the talent and then retention around that going forward.

Got it. So keep that strategic lens on and discard the nice to haves. In what ways does a talent focused organization have to change their processes and adapt?

I think the most important thing is to keep an open mind and be willing to learn from the organizations that we acquire. There's obviously a reason why we're attracted to the firms that we acquire. They're doing something very well. It's important that we learn from them both culturally and operationally. So we have to be open to adapting our methods, our business model, in a way that incorporates the best practices of both firms and constantly evolving in that way. Some examples Might be an acquired firm maybe brings a new way of managing the sales cycle or the CRM process. Maybe they contract with clients in a new way or have some unique elements around their customer support model or how they deliver on revenue. Could be a myriad of things. If they're doing something very well and that's a little bit differently than how we do it in jll, we have to have an open mind and think about how do we preserve that and then maybe even reverse integrate a little bit into jll, some of those practices. If we don't do that and if we come at it with a mindset of this is how it's always been done at jll, don't ask any questions, we're not going to be very successful in motivating and retaining those people.

That's a really interesting view and I think talking to companies that have been on the other side of the deal, it doesn't always pan out that way where they really they had the better process and things get integrated in a different direction. And for myself we talk a lot about agile and I think that's a very good mantra to have that level of agility to change your plans as you identify these unique opportunities during the integration phase. I'm curious, how do you drive that? You have the right view and vision around it, but when it comes to this stuff actually getting executed, how do you align your other team members to think that way?

Yeah, you've got to narrow in on what we can change and what we can't change. We can't change our CRM system, We can't change the fact that we're all on workday or whatever the case may be. But we can certainly adapt how we interact with clients on a day to day basis. It's really keeping open lines of communication with the acquired team and hearing from them what's working and what's not working and giving them the autonomy to continue doing some things the way they've always been doing them. If it's working.

I like that view. Give them the opportunity, listen to them, which is important. But I like how you define things at which you can and can't do. I think that sort of reciprocates a clear way of communicating and maybe that's an area that gets lost with companies that have that issue.

It's a lot harder than it sounds. For sure.

Yeah, I was going to say you made it sound great. Love to put in play. But at the end of it you always hear about those things falling. When it comes to host Day one day activity. How do you think about synergies in the context of a talent based deal?

Yeah, so synergies in a talent based deal are a little bit unique. So in any acquisition there's always revenue synergies and cost synergies. And I think on the cost side it's a little bit more traditional. You look for back office efficiencies. We might consolidate an office footprint or something like that. So there's usually some low hanging fruit around cost synergies and then maybe other areas we can get cost out. But the revenue side of things can be a little bit trickier. In a software transaction, you acquire a product and you can sell it through your existing distribution channels and just see an immediate uplift theoretically in sales. Can't do that in a services acquisition. The only way to really scale services is to add more people or make them more productive. So we try to do both and we look for opportunities to engage our people in cross selling, helping them get educated on other JLL products and services and sell those into their client relationships and vice versa. We certainly want to try to bring the acquired team new business as well. We try to get them focused on bigger transactions with more enterprise level clients that maybe they didn't have a lot of access to previously as a small firm and that can do a lot for increasing deal sizes and productivity overall. So it's all about leveraging each other's clients, trying to expand wallet share with those clients. And then of course, as the business expands and grows, we do have to add headcount over time. We'll support headcount growth as needed. And it's harder to get all those revenue synergies in a services transaction. And I'll be honest, we don't really pay for that upfront. It's a little riskier, it's a little harder to bet on some of those things actually happening. Unlike a technology deal where you have run that play many times before, that's typically where we use earn out is cites a more lofty revenue and profit growth objectives and you've got to hit some of those synergy areas to be able to achieve that.

And then does the accountability ultimately fall back on that acquired leadership team? Are there other areas in your organization where that accountability is going to lie, maybe even on the cost energy side as well?

Yeah, I'd say it's a mix of both. Most of our acquired teams do maintain some level of autonomy in how they operate their P and L day to day, and they do have accountability, but they are Also part of a larger business line or organization. And those leaders have accountability as well, particularly on the cost side. Cost takeout is typically a more functional activity, so it's shared accountability overall. But the acquired team plays a very big role in helping achieve synergies overall.

How do you keep these synergy assumptions, the drivers of the deal, realistic and obtainable? You hear about this a lot of times. You sort of push things to hit the valuation, make the deal happen, but then things get to the next team to actually execute on these synergies and they're looking at these model as there's no way this is going to happen. I'm curious, how do you get that alignment so that everybody's on the same page and they're really committed to doing it and making sure that it's realistic for everybody?

Yeah, we're pretty conservative around those estimations. We have done over 30 transactions over the last six years. We've got a good body of knowledge now at this point as to what we were actually able to achieve on those transactions versus what we thought we were going to achieve. And there aren't a lot where we fell way short. We got a pretty good batting average on hitting our business cases. And as I mentioned earlier, we tie a lot of earn out to hitting those synergy cases. We're not paying for it until it happens. Where there's uncertainty, that's the right way to structure it. By and large, we've been pretty conservative on synergy and in some cases it's gravy. But we can do that in a services acquisition. We have played around some technology acquisitions and those are a lot tougher because they're more competitive and sellers are going to expect you to pay for those synergies up front.

I like the rationale where you can benchmark your previous deals to be able to be confident as you come up with those models.

One of the byproducts of having so many earn outs is you're measuring things forever. So we've got a lot of measurement that is true.

That's a really good point. Are there any areas you would see that potentially would be the areas that are the toughest or tend to fall short when you are driving those synergy.

Values, it's tough to measure cross selling. We have some internal incentives in place to drive that behavior. People can actually share in each other's revenue streams when they cross sell with each other, but it just doesn't always happen or get recorded. Sometimes the synergies there, but it's hard to measure and Put a number around it. If not everybody's doing exactly what they need to do to get that credit. So that can be a tough area.

I remember chatting with a friend who's an integration leader and he made a point. I always see cross selling as on the synergies list, but then when it comes to integration, we never have cross selling training on our integration list.

Yeah, that's a problem. The other area, we don't use this a lot ourselves because I'm always skeptical of it. It's win more deals. We're gonna. We're gonna win, we're gonna win more. We're gonna win bigger relative to some baseline that's really hard to measure because now you're measuring what happened against an alternative reality that never happened. So that's a really tough one. And we tend to try to stay away from booking those kind of synergies. If we win more deals and we win bigger deals, that's great. But we're never gonna be able to really prove it with any precision.

Very true. That's another good view of being realistic on synergies. What are the actual steps of a talent focused acquisition?

I would say in general, the steps are very much the same as any other acquisition in that you have your sourcing and evaluation period and move through negotiations and due diligence and letter of intent and contract negotiations, all of that as you work towards signing and closing. I think what is unique about talent based deals is where we spend more of our time. The long poles in the tent for us are really first on the front end, the sourcing and evaluation of a potential opportunity. That can be a very extensive dialogue with the target to determine if it's a good mutual fit, it's a good cultural fit. It's more like a recruiting exercise where you're trying to recruit some executive leadership into the firm. And there's quite a bit of wooing that has to go on, frankly. You've got to articulate the vision you see for the combination, determine if they share that vision as well. And it's really about determining that mutual fit and is this going to be a good home for their employees going forward. And that can take months and months. In some cases, it's even taking years on and off. We have acquisition targets out there that we've had discussions with on and off for years, and maybe the time will be right at some point to come together. And then where we also tend to get hung up in more lengthy negotiations is negotiating the finer details of earnouts and retention and employment Agreements and, and non competes. So a non competition agreement is part of any acquisition typically. But in a talent based deal it's very personal. It affects someone's livelihood specifically. So it's not just about asking the seller who's a group of venture capital firms or a company to not re enter that space for some period of time. You're talking about people's jobs. Those get very detailed, very personal, but they're also very critical because we're providing a value for that person's talent and that person's commitment and we have to get that commitment in return.

Would a non compete help lower flight risk?

Absolutely. These are pretty heavily negotiated and as you can imagine there are ways to get out of them on both sides. But it absolutely helps flight risk. And I think a non compete combined with incentives to continue to perform post closing, the two have to go hand in hand. And ultimately we've also got to keep people motivated and happy. Money in handcuffs alone aren't enough always to keep people around. We've got to do a lot more than that.

This is really good. When we talk about lowering the flight risk rate, we have earnouts. So you got some long term incentives, we have other incentives. Or based on various financial performance metrics, you're also doing contracts. I assume you're extending some form of contractual agreements with the key people that you want to retain.

Employment agreements. Yeah. The last ingredient is really shaping a role that the individual's really excited about. Giving them the opportunity to lead, giving them accountability and ownership. That's often the most important element of the overall package for the sellers.

I'm curious about that one. Can you walk me through it? Because even as a business we've been approached by strategics before and that's never really come up. But I'm curious, how do you frame that as something enticing from the onset? It doesn't seem very exciting.

Yeah, we don't do a lot of pure consolidation. M and A. Most of the talent that we acquire is talent that we don't exactly have today. So when we're bringing acquired talent teams and sometimes that team is combining with another team, sometimes they're not. Sometimes they're going to represent a new practice area for us or a new brokerage team or a new type of project services that we're providing, we often have the ability to give them ownership over their domain. And then in cases where we are combining them with another team, even in those cases, sometimes we've given them ownership over the combined total. We make a lot of acquisitions. Where we're lacking leadership in a certain market and we're using the acquisition to go out and get that leadership. Going back to something I said earlier, these are very much similar to a recruiting exercise where we're really looking for not just an acquisition, but leadership in some part of the business.

Do you ever get some resentment around title changes?

Oh, sure. Titles are of varying importance to different people and our title structure is never going to correlate to everybody else's title structure. So that's always a negotiation. But we're usually able to work things out on that front. The trickier parts are when we're bringing a team in and there's already a team there and maybe they know each other and have their thoughts and maybe they don't, and getting those teams to work together and sometimes, sometimes it doesn't work out for every single person in that equation. But generally we try to bring in teams that are a good fit from the beginning.

How do you plan for what competencies you'll need in 12 months, so forth?

We're aware of that now. We have lots of different services and capabilities that we offer where we're falling short and that becomes part of our strategic review process. And our executives meet quarterly and then more often than that on a less formal basis constantly to review where we have strengths and weaknesses and where our strategic priorities need to be. So that's all part of our strategic process and trying to plan ahead for where we want to do M and A going forward. It's got a map to the strategy more broadly.

Makes sense. So it stems from a broader strategic resource planning and then kind of moves to you for execution. If acquisition is part of that.

Absolutely.

I want to go back to the part where you mentioned on these talent focused deals that you're essentially driving it with more of a recruitment type of process, I think is interesting and a big topic that comes up, Christina, is culture fit. I'm really curious on your view on what are those key characteristics that define that culture fit.

And yeah, that's the billion dollar question, right? It's cultural fit and cultural diligence. We've done enough of these to know full stop by now that culture is about so much more than aligned mission statements and corporate values and even personalities. It really extends into the organization in terms of how each company does business day to day. How do we contract with our clients, how do we maintain relationships with our clients, how do we resolve an issue with a client or how do we resolve an issue internally? Maybe an HR issue. So who's making decisions. Do we have a consensus based culture or more of a command and control culture? Those are the kind of things that we really want to try to understand as we're doing that cultural diligence is how the company really functions day to day. And that's going to require talking to more than just the CEO, obviously, because the CEO and the C suite are going to have one view of things and two layers down, it's going to be a different story potentially. So we do try to go a layer or two down. We may ask, we may ask the target firm to disclose some other folks. And we see this coming out through diligence too, as we're doing normal diligence around financials and HR and marketing and all these other areas and talking to all these different people who represent the firm in those functions. We can see how they operate by how they run their financial process, how they run their reporting and forecasting, how they conduct their marketing, how they conduct their HR processes. So these things come out in pieces through all of the functional diligence as well. Those are really good conversations to have and dig into just on many layers. For us, it's really cultural due diligence is almost a layer that hangs over every element of diligence because it's going to shine through in every interaction we have.

Can you give me an idea some of the titles that you would want to speak to?

We want to talk to not just the cfo, but a director or VP in finance. The guy or girl who's doing most of the work and working with the systems day to day. So somebody in the trenches. We're not going to go way far down because those people just don't get disclosed in an acquisition scenario. That's just reality. But down to the VP or director level and some of the functional areas.

Functional leaders, basically.

Functional leaders or the functional leaders number two. Those can be helpful. Some of these companies that we're acquiring are very small. They may not even have that many layers. And we can get underneath things by talking to five or 10 people. But yeah, it's functional leaders. And then also if we're looking at a firm that has more of a infrastructure around sales or customer support, we'd want to talk to some folks there as well to really understand how they approach a support situation. For example.

Yeah, I like this. You're not looking at cultural rituals, you're looking at the way they deal with issues and make decisions.

Absolutely. We've also asked in a few cases and you need a firm of a little bit of a certain size to ask this question, but we've asked them how do you conduct your annual review process? How do you determine compensation? How do you determine bonuses every year? And we might even ask for some of the very key talent that we're going to put retention out to who might ask for their performance reviews for the last couple years. So we really want to understand how they are assessing their own talent as well.

That's a good tip. Look at the performance reviews. I have a recruiting question for you. Tell me about a time when you walked away from a deal because of a bad cultural fit and why.

So it usually for us happens pretty early. We haven't walked away from the deal post due diligence for that reason. So it's happened earlier in the process. I would say there've been a number of situations where we have a very collaborative culture in jll. It's a nice balance of professionalism and entrepreneurialism. And we've met with some other firms for consideration for acquisition where it was not as collaborative of a culture. It was a little bit more cutthroat. Maybe we read some really concerning things on Glassdoor or something to that effect that, you know, made us pause. That's an. That's a good resource as well. Can be. Take some of it with a grain of salt. Sometimes our interactions with the CEO or the owner of the firm, it's just not a good interaction. We certainly had those situations, but in most cases we've walk away from those before we've gotten too deep into the process.

Interesting. What are some challenges that you may face on talent acquisitions?

The biggest challenges we face are around these earnouts. These tend to be longer earnouts than you would see perhaps in a different type of transaction. If we're putting out a certain value for a firm, we're going to want to try to get a payback on our investment or at least some return on our investment within a five year or so period. We try to map the non compete to that similar kind of timeframe. These can be long earn outs. Sometimes they're five, six. I've even worked on seven year earnouts, which I think some people hearing that on this podcast probably think that's crazy. But we've done them and sometimes we've had to go that long to bridge the gap on valuation expectations, frankly. But that can be really challenging to negotiate the details of that. You've got to anticipate how the business is going to look five to seven years from now and anticipate any Potential reorganization or build build some flexibility into the agreement around unanticipated things like that can be even harder to measure these earn outs going forward. Especially when people are constantly churning throughout the organization and the person measuring the earn out might be two or three different people over the course of a five to seven year period. They've got to understand how it works and how the agreement was written and there's inevitably push pull around how revenue or EBITDA is being measured. We frequently get into scuffles over that. We don't really get into a lot of flat out earn out disputes in the classic sense because at the end of the day it's an employer employee relationship in most cases and neither of us wants to engender any ill will. So we really try to work towards a mutual agreement and find a win. But we certainly have lots of discussions around earnout measurements. And then the other big area I mentioned is the non competes. Those can be challenging as well. Negotiating the finer details of the lots and lots of learnings on earnouts and measuring things. And it can be really hard to both integrate a business and ring fence it and let them run their own P and L for a five to seven year period. That can sometimes hinder the cross selling. You might not be able to get all the benefits of integration when you have an earn out in place and that's the balance that you need to work on.

So those are big handcuffs. You have to special order them. Hopefully they're worth works out people seven, five, seven years in, they still stay on the earn out schedule.

Yeah, absolutely.

Question I have here is if you tend to do share or asset deals one, if you do either one share or asset, which one do you typically lean on? And I'm curious to know if earnouts would actually impact that as well.

We typically lean towards asset deals, but we've done share purchases as well. You can use an earn out structure in either. So there's no limitations around earnouts driven by asset versus share. And we've done some that are escort acquisitions with 338 elections and all that too. I think the key thing to remember with earnouts is that earnouts have to get paid out in the same way that all the other purchase prices paid out. It's got to match the cap table. You cannot allow a situation where the earn out money becomes a pool of money that the owners can just do what they want with. And hey, Billy did a great job last year. We're going to give him some earn out. Well, Billy's not a shareholder so he's not entitled to that money. And there's been case studies on this real life situations where that happened and earn out money became fungible. And that's a big no. We look for reps and warranties in our purchase agreements to assure that earnout consideration is going to be treated just like all the other purchase consideration and that it's going to get distributed in accordance with the capitalization table.

Keep it cut and dry.

Yeah, that's an area we can get in hot water quickly. But we've had a lot of experience around that and managed to keep it clean.

When we do a roundtable earnouts, I'm definitely going to extend invitations.

That's going to be a big roundtable of sobbing people.

I've had a good number of guests that swore them off and don't do earnouts anymore. Do you have a playbook for synergies, a standard set you look for?

I wouldn't call it a playbook in that it's not written down anywhere. But there are definitely synergies that we look at over and over again, deal to deal and synergies that we try to avoid. Like the we're going to win more together synergy. And then every now and then we do a deal that doesn't look like the other deals that we've done and we've got to think are there some unique synergies here that we, that we've never seen before? But no formal playbook which is more knowledge based?

I would say who's got the biggest influence when it comes to synergies? Because you can have some coming from the target company, you can have some coming from your different bu within your own organization and obviously your corp dev team. Where does the influence for synergies come from?

I would say in most cases JLL has the most influence in bringing synergies to the table. Because most of the time we are acquiring a firm that's much smaller than jll. Most of the acquisitions we do are very small or mid market companies, boutique firms in some cases. We are definitely bringing a lot to the table with our platform and our client base. But small firms bring synergies too, so I don't want to discount that. But just given JLL's sheer size and breadth and sort of global reach, it's inevitable we're gonna, we're gonna bring a lot of that to bear.

I guess I was curious about determining it and building out the model, contributing to the assumptions.

Yeah, every deal we do has a sponsor, internally so it's typically that sponsor and his or her team are helping us estimate what the synergies are gonna be and where they're gonna come from. So it's very much the organization that's gonna be absorbing the acquisition.

How have you seen the current environment impact these kind of deals?

Yeah, so. Good question. It's impacting current deals that are still integrating and moving through their earn out periods. And it's impacting obviously new deals. In terms of the current deals, it's been challenging because obviously a lot of areas of the market have seen a big slowdown. We've certainly seen a slowdown in certain parts of our business and some of those areas are areas where we've done some acquisitions in the past. It's challenging for those firms that are, they're firing on all cylinders trying to hit their earn out targets. And it just got a whole lot harder with COVID hitting and they may be derailed altogether in hitting those targets and feel unfair that this is happening right now. So it's definitely impacting those current deals, but at the same time there's always the risk of a slowdown that's always out there when anyone does an acquisition. I would say with regard to new M and A, we've definitely been very cautious about undertaking new MA in this environment. There's just been a very broad lack of visibility in terms of where the industry, where our industry is going to be over the next six to 12 months. We're always on the lookout for attractive opportunities, well capitalized and well positioned to move quickly if something very compelling comes along. I would say more generally in the market, there's been a broad slowdown in M and A in the second third quarter, but I think it's starting to bounce back a little bit. We've got six plus months of the pandemic under our belts. Now. We sort of know how different industries and firms are behaving through this time period. Period. We've got a little bit more knowledge, a little bit better visibility in some areas and at the same time we just can't sit around all waiting for this to be over. It's going to be another probably year or two before we really start to get back to some resemblance of normal. M and A. Can't just stay on the sidelines forever. I've been seeing a lot more coming to market now just in the last several weeks, similar to what we're seeing in the IPO market, some signs of life and revival. And for companies that have demonstrated over the last six months that things haven't fallen apart, that they've been actually resilient and maybe have even benefited from some of the tailwinds around Covid then those companies are going to do very well, I think, in a sale process at this point in time. And then of course you're going to have some distressed asset sales as well coming out of this period. It's taken time for those to evolve. Six to nine months now post pandemic, we're starting to see, unfortunately some distress situations too.

Yeah, that really sounds great. It basically went from a complete halt to proceed with caution.

Yes, proceed with caution. Exactly right.

Christina, what's the craziest thing you've seen in ma?

Crazy is probably a strong word. Nothing too crazy, but we've certainly had our interesting and comical negotiations at times. I remember one transaction I worked on in my former life at IBM where the sellers were very insistent that we you keep getting that fruit basket delivered every Monday morning to their office. Everybody in the office loved the fruit basket and it was like a cultural symbol of giving. And so we committed to that in the purchase agreement that we would keep the fruit basket coming for X number of years with a weekly budget of X. And it was. That was critically important to them. And we've seen other situations like that where hey guys, we need a wine budget. We send wine to our clients every year for Christmas and we send good wine and this is what we spend. And can you make sure you underwrite that in the business case and put it in the contract? And in few cases we have. It's funny, we get hung up on the big stuff like earn outs and employment agreements, but we get hung up on the small stuff too sometimes. Sometimes these things are symbolic of something much bigger. Culturally.

It's a great negotiation. Tip. I'm going to start blocking cost synergies in the pa. This has been great. So as some of you may have heard, we're starting a Women in M and A podcast series and in fact, Christina, you may be contributing to it.

I've heard that's coming up and I'd be happy to participate. It sounds exciting.

Christina, thank you so much for being a guest. I really appreciate the time and sharing your experience.

Thank you Kisan. Appreciate the opportunity.

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