Successful Acquisitions Through Leadership and Culture

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I'm Kisam 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 MA deals. Welcome to M and A Science where leading M and A 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 and subscribe to our free newsletter. Every Monday 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 Kisan Patel, CEO and founder of M and A Science. Joining me today is Tim Wentworth, recent CEO of Evernorth, a portfolio of Cigna's health services portfolio. Tim was the CEO of Express Scripts at the time of the sale to Cigna for? 67 billion in December of 2018. At the time of the sale, Express scripts was ranked Fortune 26 and the deal was the 35th largest M& A deal of all time. Tim has been acquired twice in his career and thrived in his new environment. Today we're going to talk about the role that leadership and culture plays in successful acquisitions. How are you doing today Tim?

Doing great. Great to be here with you. Happy New Year Kisan. Hopefully you're healthy and ready to rock.

We're off to a great start with this interview. Can we kick things off with a little bit about your M and A background?

You know, in my case, I've got to go all the way back to when I was 26 years old. I'll never forget it. I was at PepsiCo and we had acquired a bottler in Tulsa and I learned almost everything I needed to know at M and a at age 26 because we acquired them. My boss said to me, I need you to go down and run human resources. You're not ready but you're the only guy I got was sent to go do that. We inherited a union campaign in a place called Harrison, Arkansas in the middle of the Ozarks. We had business Challenges trying to integrate it into the core Pepsi franchise. At 26, it was my job to figure that out. We ended up in that case going in assessing leaders, which is a real big part of obviously any merger. And I'm sure we'll talk more about that ultimately changing out some leaders because in fact that union campaign was the result of some bad management that we had purchased, won that campaign, turned that business into a very high performing business, pretty much did all that with local leadership. Pepsi then sent me at age 30 over to England to integrate Walker's Crisps. We bought a potato chip company in Pepsi's food business, which is Frito Lay International at the time. And so went over to England and spent three years integrating that business into PepsiCo. And then of course I joined Medco, Medco Health Solutions. It was part of merck Medco. In 1998 we spun off, I helped spin it off in 2003 and then again we acquired a business called Apito Health Group, which is today the country's far and away most successful biotechnology pharmacy. It was a big acquisition for a relatively new spun out company. And I was sent down to run that. And I'll never forget it. I actually go through my stuff for retirement. Still got the speech that I gave to the employees. At the time that I went down there, I knew nothing about biotech pharmacy. I knew a lot about leadership. I knew a lot about the PBM business that they were now part of. But there are a whole series of principles that again we'll talk about in the next hour that sort of stood me in good stead was we took over credo and when I went down it was with the possibility of having to impair the asset a year after the purchase. By the time I left we were growing substantially. And today I don't even know what it's worth. It's probably if it were to be spun out on its own, worth 30 or, or $40 billion. So it's been tremendously successful with a lot of the things that we put into place back then as part of that merger. Of course, the two big ones you're talking about, we took Express Scripts and Medco put them together in 2012 and I was a Medco employee. Express Scripts actually purchased us. I remember when I got the phone call from our CEO Dave Snow about the merger that had been discussed. I asked him if I could stay. At the time I was about 52 years old, really didn't want to retire yet. Loved the business and thought I could be helpful in putting the Two companies together, culturally of course, this was a horizontal merger. And so it was going to be difficult. It was going to require a real lot of assessment of talent where you could take one plus one equals at the end of the day one. And so you needed to pick one and go for many positions. I mean to give you an idea, we started with 450 vice presidents the day the two companies merged. When I joined, we had 150 six months later. So there was a process to really selecting and structuring a business that I was part of. Again being the acquired company, they put their trust in me. I ultimately became the CEO of that company. Which is proof to anyone listening to this that being acquired is not a death sentence. Being acquired is a massive opportunity. If you love the business you're in and you understand the customers profitability, the underlying economics of the business, you have a real shot if the acquiring company is smart and they're looking to pick the best talent to help them make it succeed. And most companies do want a merger to succeed. And I was fortunate that I was the guy that owned all the customers at Medco pretty much. And therefore was the natural go to when we put the companies together and it worked out really well. Spin that clock ahead. 2018 After a long drawn out process, not due to us, David and I actually CEO of Cigna and myself from the day we met to the day we announced the deal, it was only about three months, so we moved it quickly. But again a very large deal of not a horizontal deal, a vertical deal where both of us had a vision that we'll probably talk a bit about and put that together. And once again, after the deal was approved by the shareholders, David and I spoke about my role. And of course having been the CEO of a Fortune 25 company wasn't going to be likely that I would stay in the eyes of most folks. But I love the business, love the customers, love their employees, knew the investment community well and liked it, knew that business in a way that would hopefully help the combination begin to create real incremental value right on the chute. And so I actually volunteered to stay for three years. I've just closed out what was just slightly over three years and glad as heck that I did because every lesson that I learned over the last 40 years, I put the test in making this merger, which was much, much bigger than any other one I'd been part of, successful. So that's the long winded answer to your question. It's pretty much been a const constant theme through My background, if I'm one side or the other, companies being merged and trying to make that super successful.

Wow. I like how you started. From 26 through now, a lot of lessons learned. We got to cover as much as we can today. Can we get into what are the key principles for success?

I've taken some notes thinking of it because I really wanted to try to distill some thoughts down and be efficient for you. It depends on whether it's a vertical or strategic kind of acquisition or merger versus a horizontal one. There are some differences and you need to conceptualize that at the starting point as you think about even planning the activity of making it successful. Understanding what the synergies or the advantage is in the thesis that you're looking at as an acquiring company is important. You've got to have a fundamental strategic thesis. But I also think focusing on culture and leadership, particularly if you're doing a vertical move, is really important. When we bought Evercore, one of the things I did that I didn't mention in the beginning was I bought Evercore for $3.6 billion in 2016. 17. That was a vertical move for me. It was a new area for us. We were beginning to define ourselves as a health. It was a chance to visually create the transformation that we were working on strategically by adding something that was different to us that was all about is that leadership team on board with this combination? Can we keep them engaged? Can we help them help us deliver incremental value and look at what do we each bringing to the table, which really required us to take a look at them as equals. Even though we were buying them for 3.6 billion and we were a Fortune 25 company, the real goal was in that space. They were our go to market strategy if that was going to be successful. And so this notion of understanding the culture and the leadership there, which again, that worked quite well for us because we wanted to buy a great team and we wanted to lock them in. And we believed that we could align them to delivering not only incentives. And yes, it required a big company to do some things that weren't as natural for us from an incentive standpoint to motivate and keep that group of leaders, all of whom stayed for three years, by the way, which is almost unheard of and produced a lot of value for us. The other one is I don't believe in buying crappy businesses and fixing them. Some folks have done a really good job of doing that. That's just simply not been the strategy that I've seen work I'd much rather buy a really strong business with a really strong team, or if it's horizontal, a really strong customer base or a really strong geographic depth and figure out how to integrate it without losing the magic that it brings to the table. The other piece I would say is keeping focus on clients and customers. Both entities through the process of merging and really after the process of merging cannot be over managed enough. It simply can't be. And again, the important point that I've learned is it's easy to think about focusing on not wanting to lose the customers of the company you acquire. In many cases, that's why you're making the acquisition. That certainly was why Express Scripts bought Medco. We didn't want to lose all of our customers. Cigna buying Express Scripts, we had a wonderful book of health plan relationships that Cigna and I saw as an opportunity to grow health services. Losing those customers was going to destroy the underlying opportunity to create longer term value as you innovate. And so for us it was the two things I cannot emphasize enough. And I see so often the mistakes made. One, focusing on the customers of the acquired company and the teams that support them. They're the ones those customers are going to listen to, not you, the CEO of the acquiring company, that team that they've been working with maybe for years. And when they say to them, hey, what do you think? Is this going to be good for me? The answer that team gives is going to have more to do than anything else you're going to be able to do in the short term to try to keep that customer. And so you've got to start by convincing your new employees that are customer facing that in fact this is going to be good because their reputations are on the line with those customers every day. The flip side is in the place where I've seen us lose some site, not at Cigna, I've said, but in some other acquisitions. You also got to make sure you pay attention to your native customer. So I can tell you, when we merged Express Scripts and Medco, as much as the Metco customers were like, what are this mean? For me, the danger for Express Scripts was that we focused so much on those Medco customers and integrating them that the Express Scripts customers now felt like second fiddles and felt like they suddenly needed to look around now because they weren't as important as they once were. They used to be a bigger fish in a smaller pond and so forth. And so again, those account teams that service those clients needed to be confident that they were not going to be unsupported or lose focus. And then those clients needed to hear that. From my perspective, that piece of both the clients and the teams that support them, you cannot do enough true deep communicating and delivering for them both ahead of the integration as well as after the merger occurs.

Prioritize culture. Don't buy crappy companies and focus on the customers.

So much focus on the customers. I just can't tell you. Again, particularly for the mergers I was part of that I just described in every case, there was a thesis that had a significant dependency around keeping and growing customer relationships. And so from that standpoint, again, especially in a publicly traded company, where they begin to see what's actually happening to your customers, to accumulate customers and scale is to validate the thing in the eyes of investors and therefore create excitement. To see customers running out the door because you're not communicating well with them, because their teams don't believe the thesis and that they're going to be supported and other reasons gives you the opposite kind of spiral that you really don't want.

Was there anything you did, Tim, to keep that alignment amongst your leaders as you went through that whole transformation or integration process?

From my perspective, if I look at the Cigna and the Express Scripts merger, the recent one, I think what was really important was making sure that we nailed down the top team and that they all felt bought into being part of the new company. And that's not easy. Folks look at their place in the pecking order. Especially in my case, they had all been ELT members of a Fortune 25 publicly traded company. We were very proud of that. Suddenly, in some cases you may not have been an ELT member of a much bigger company and helping people understand that and really focusing on the places they can add value, having them still be part of the strategic process and so forth was really important to that because again, in our case, we didn't want to lose the leaders, we wanted to keep them and then elevating some key leaders. And I think the other thing, especially in mergers like ours, the places we've been the most successful is where we've actually been able to take talent from one of the legacy companies and move it onto the others, and vice versa. Those are some of the tactical things. There's also this cultural piece where intentionality around culture and values and those are two different things, was really important to where things have ultimately ended up and some of the work that we had to do to make it successful.

Let's back up. Culture was a big emphasis. Let's talk about how do you focus on culture?

The one thing I learned, oh gosh, probably in the first acquisition I did, I started by wanting to validate the culture of the company we just bought and validate the accomplishments. People are there for a reason when they're part of a merger. It's uncertainty, it's scary. They want to be understood, but they don't believe that they're going to be in many cases. And so from our perspective, really important. That said, I want to come back to that process starts long before I think you actually merge companies. In fact, it may even start in many cases before you begin discussion of a merger. It begins when you begin profiling a chessboard. And I encourage every company that has the capital, flexibility and opportunity to look at potential different relationships, whether they're mergers or partnerships, to go deep in your pre diligence on culture. Even things like what's the glass door say on this company? As species as that can be, sometimes it can tell you a lot. And it can not necessarily obviate or excite you about a merger, but it certainly will raise the right questions about, hey, tell me about the culture. I got asked that at Express Scripts by the CIGNA folks. They were well aware that we had been a company that rolled up its industry for 20 years. So we were brutal. We were a tough place to work. Everybody knew it. Plus we were taking costs out of health care, which is not easy work. And so there was a little concern because cigna's culture was very and is very collegial, very planful. We were highly innovative, very focused, but very fast twitch and again had been a real bare knuckles company. But the reason I was put in to lead it was we needed to convert to organic growth. There was no more rolling up our industry in the PBM business. We now had to be a place that could actually grow customer relationships, grow depth of relationships with existing employees. We weren't going to be getting another slug of employees to evaluate and pick the best of. From that perspective. CIGNA was deeply interested. How far along that path was I? What were the measures that I was using to measure engagement, to measure employee satisfaction in bigger measures than just turnover. And one of the real fortunate things in our merger was we found out we were using the same employee engagement device and company. And so we were able to actually have a normalized perspective pre the merger, pre the day that we closed about where were their similarities in the culture? Where were their differences? Where were the things to reinforce in the culture of each company? Again, because Even Cigna was trying to figure out, heck, we've got some people that do the work, Express Scripts does. What's going to happen to them? What does this mean? It really informed our communication process as well as our leadership selection process in figuring out which leaders we need to lock down to be elevating to have the employees see the kind of leadership that we were committing to.

How far does that culture analysis get shared? It's just purely executive. Does it get spread across management?

First of all, we put our teams from the two companies together during again the merger planning process. Obviously you've got some gun jumping stuff you got to be careful with, but that stuff generally doesn't come afoul of it. And so you can push pretty hard on putting teams from both companies together into the room, which is what we did, and going deep on the data. But ultimately to your question, what we wanted to do is be explicit and transparent and clear with our entire workforce about this new company and what it stands for. Keystone. Where we began to bifurcate the message a little bit was values, as I mentioned before, versus culture. And what we concluded was that I actually, I've never worked for a company that didn't have multiple cultures inside. You go inside of any given company and there are subcultures and those are usually adaptive and healthy in well run companies. And you let those differences play out. And most classic is the technology folks versus the marketing folks and they have different missions inside the company and therefore hire people with different biases and perspectives and interests. You can still share the same goal, but your subcultures are different and you can negotiate that a bit. And we did. Between Cigna and Express Scripts, we spent a lot of time looking at the culture. What you had to have some absolutes on was values. And so that's where we spent an equal amount of time was okay, we've looked at where the hotspots are in the culture, we've looked at where the alignment is, we've looked at how to message that in a way to all of our employees to say we're thinking about this, we're studying it, we are intentional about wanting to have a great culture. It's focused on the patient, it's focused on employees and be able to lay that out. The values part of it though was actually a little bit the harder part because that's where words began to really matter because those aren't negotiable. Those don't get to be different across different parts of the company. In fact, Cigna had a. I Guess I'll say it because I was proud of it. A no assholes rule. I think that's a great value. I think that speaks volumes to people. Basically says, listen, come into the room, be challenging, have ideas, but don't be a jerk. But we obviously developed a better statement of values than that. And those values combine the best of both companies and we're a bit more aspirational. Cigna being a multi hundred year old company, highly successful, very good at managing risk, probably not as risk taking and as speedy as express scripts. On the other hand, maybe a little bit more ready, fire, aim, sometimes ready to pick a fight all the time. Because that's what we do to lower healthcare costs, whether it's with pharma or retailers or whatever. We had to reconcile some of those differences that show up in culture, but you can't have them show up in values and how we work together. We talked about working with speed and purpose, for example. That spoke to both cultures and both groups of employees. And again, back to your original question. As we iterated through that, and by the way, I would point out the CEOs of both companies, myself and David were deeply engaged in those working sessions. We didn't just bring staff work into our offices. We literally were sleeves rolled up debating certain words, debating the order of things, debating how to best communicate it. Because I do believe the chief executive officer of any company is the chief communication officer. And in that case, this was the most important thing we were going to communicate. We could talk about the strategy all day long and the needs in the market. Our employees were aware of that. What they wanted to know is, but who am I working for and how can I expect to be treated? Are the things that were really important to me in my sovereign state going to be equally valued in this new combined state? We wanted to be able to answer those questions with clarity and in a way that left no room for debate. In terms of what we stood for. That was a really important part of it. I think it's imperative that you've got to put it out there for all employees, but then you got to be ready to live with it because that's the risk. You will be held accountable to those values once you put them out there.

When it comes to mapping and actually evaluating. I'm curious to get a sense of some of the steps that go into it. Both when you're looking at it from the values perspective and culture, what comes first?

I think values comes first. When I look at deals I haven't done. There are a Couple that were around what I ultimately found to be values as I was either doing pre diligence. So it was before any offer that was a non binding, for example, which would have then entailed some diligence and so forth. Especially in today's world, you can't hide from your reputation. If you want to really understand a company, you've got to be discerning about what you can find out in the broad social media and other media sources. But especially if you're in your general space, you probably have people working for you that have worked with or for some of the companies that you'd have on your chessboard you would have folks that you work with, whether that be consultants or bankers, who may have a perspective on folks. You can look at the movement of executives across the company over a period of time and assess certain things. So from my perspective, again, it requires a lot more work than most folks are willing to do. But that upfront deep profiling of the real opportunities that might exist on your chessboard, both the ones that are in the obvious zone and maybe the ones that are a little bit more creative, is really important. And that's true whether you're looking at ventures or anything else. I can tell you there's a guy who did what I believe is one of the first deals where Amazon put their brand on somebody else's work and let us run their pharmacy for them. That was years in the making, getting to know one another and making sure that the way that you would be able to work together. And some of that's face to face. Some of it's ignoring the public stuff and trying to look beyond it and digging beyond it rather than just taking some of the headline. Because I was told a thousand times, oh, you can't trust Amazon. By people who'd never done business with Amazon, by the way, but just read the same articles as everybody else and it was down to eyeballs, down to looking at people. It was down to obviously lawyers manner. But you want lawyers that are enablers, not deal killers, which we've always been fortunate enough to have. It starts before the merger in how you profile I think the pieces on the chessboard. And again, so many mergers come from certainly my world have come from where you had some sort of relationship already. You got to know somebody. Evercore is a great example of that. And in fact I think Evercore is kind of an interesting story because I acquired Evercore at Medco Express Scripts and the biggest risk I took was Cigna was their biggest customer. But I actually Saw that as an opportunity to build a relationship with Cigna where maybe I could sell them some other things. That's actually how the deal got started with David and I as I was actually trying to pitch a white label deal to expand the services platform. Little did I know David and his board were already looking at a services platform. Liked our company like the culture of Evercore. I like Cigna's culture. I saw them as a real likely buyer for us. There were several other potential merger partners for Express Scripts, where the culture of that partner, even though I would've been the acquired company, made me very concerned about creation of value, a long term and alignment. I wouldn't have stayed if several of those folks who I won't name would have potentially bought us from that standpoint. We've both been looking at each other through the lens of not only business strategy, but through the lens of I like the way they focus on the market, I like the way they focus on customers. I like the way they focus on patients. You can't be lazy at the early part if you do your work upfront in your diligence. It's confirmatory diligence to a much larger extent, but it's an informed diligence. Like I said, CIGA did a good job. I remember John Mirabito, the head of hr, put a good light in my eyes and said, listen, I lived in St. Louis in the mid-2000s and I remember Express Scripts. And here's what I remember. Tell me what it's like now. And that was an important conversation to.

Getting the deal done early is when you start thinking about values of a company super early. What is questions that you're asking when you have those initial conversations with that CEO of a company you're potentially acquiring to better understand values and culture from.

My perspective, at least in the ones that I've done. And again, I think about John Arlot at Evacor, I think about Credo and David Stevens. I think about certainly David Cordiani and Cigna. I think in all those cases, and again, two of those, I was on one side of the table. The other I was on the other side of the table. It's the same conversation actually, because most of the time, unless you're just trying to exit a unicorn, you actually want your employees to land well, you want the thing to succeed. You probably have some sort of financial incentive for the thing to succeed. I certainly did in the case of Signet Express Scripts, but so did the employees at Accredo when we bought Accredo. And so the employees At Evercore in their three year payout, we had escalators in that we both came to the table really wanting to understand value creation, but also understand where the burr is going to be found under the saddle. The other thing that both of us did is appointed really good executives to take the lead on key things. Everybody loves to be part of a merge. Everybody wants to be in the room when the strategy is being done and the decisions are being made. And really, as a CEO, one of the jobs you got to do is you've got to be the one driving the deal. There is no delegating of that. I don't believe I learned that very early on. If I'm not the chief cheerleader for that deal, my board wasn't going to go for it. It didn't matter how much my team wanted to do it. I needed to be front and center. David needed to be front and center. We both tested. Carl Icahn actually came out against the deal and David and I were shoulder to shoulder in the summer to thwart that particular narrative. And so from that standpoint, appointing key people that you can count on that are going to carry the narrative forward that are going to execute pieces of analytics, including the culture piece. So the two HR departments, really important to have them identify who are the key people, not just HR departments, key people that we're going to hold accountable and what's the right process that we're going to bring them through to make sure that we like the way that they're thinking. There was a lot of checking of the work that David and I did. We leveraged a PMO office that was probably more scaled and more sophisticated than I had ever seen. And we used a pretty good one in express scripts. But I think at Cigna we were well led in our PMO efforts. The checklist of things for a merger, if I think I'm going to buy somebody, I better know going in, what's my infrastructure going to be to help make that successful? And that comes down to literally which person or persons am I going to actually appoint to drive key aspects of the merger? And who do I see from the other perspective, the other merging partner, who do I see there and how does that feel? We did a lot of socialization to create more natural acts. One of the things I fought over a lot of years Kisan was this was big at a credo is don't be helpless just because you are on the bot side of the equation. You're being bought typically for a reason. They want you to come to the table with your ideas. Don't wait for them to tell you what to do. Don't wait. And so often folks crawl into their shelves. My job as a leader and David's job was to get our people out of their shells and moving forward and focused on the market and creating immediate opportunities. We launched three new products in 90 days after the merger. That was not by accident. We wanted to send a message to our employees and our customers. We were open for business and moving forward. That was the kind of things that again, good leaders would try to energ ahead of time is envision. What's the market going to look like three and six months after this merger? And what do we do now to actually raise the odds that that's going to happen? Because that'll raise the odds the thing is successful and employees feel like winners.

Get them proactive around your goals that you're setting out to do. One other question related to culture and values. What do people usually get wrong?

A couple of things probably one is over promising. I stepped into one acquisition. I won't say which one. It wasn't this one, where the CEO of the acquiring company had promised nothing would change. You should never promise nothing will change. I actually think the other thing you can get wrong is changing the wrong things. Obviously that's more obvious. People expect you to change things. In some cases they want you to, but they want you to be honest about it, transparent about it and get going with it. I think the other piece is waiting too long to make changes you got to do because again, people don't gain faith during that process. They lose it. The thing that's always interesting to me is quite often if you've done a good job with a narrative and a theory upfront, the party being acquired. In the case of Express Scripts, for sure, we knew being part of a health plan would be good for our future. The number of employees two or three layers down that sent me emails excited as hell about being part of Cigna and what that was going to mean for us. But what you couldn't ignore and what I had to over manage and sometimes you don't see this done. I had to manage the first two layers because that's where all the uncertainty was. Our customer service reps were going to keep talking to folks on the phone that were having challenges with taking their pills. Their jobs weren't going to change a whole heck of a lot. They just knew that they were now part of a company that probably had a brighter future because we were inside of a Bigger health plan. But the person who was responsible for our clinical decision making now knew, well, crap. Now there's people in Cigna that are also clinical and they're probably going to tell me what to do. Managing the messaging and the engagement of that group. That first layer or two underneath of the CEO, we spend a lot of time communicating to the broad workforce. I think as much time needs to be spent just engaging and keeping engaged that top couple of tiers. And to be honest with you, remove uncertainty as soon as you can. Recognize not everyone is going to probably be able to stay and get that process as quickly solved as problem. I think of the things that David Cordani, I think if he were on this podcast, would tell you, the CEO of Cigna that I was the most helpful in and I was intentional about this was in the first six months. Help Cigna C take our top 150 people. Which ones were the. You gotta keep ones and which ones were the ones that. Listen, I've been questioning them too. And which ones were the ones that were. Time for a change. And now you can deliver on something that I couldn't deliver on because maybe we weren't growing in a particular area, but you were. And so literally being very specific down to the top, but again about 150 people and mapping them very specifically. The other mistake I've seen made is implementing HR systems too quickly. And there's a number of flavors around that. One is you simply say all these employees got to be on our benefits. It's almost inevitable. It's like an Escher print. Whoever I bought, their benefits were cheaper than mine, which means it was going to cost me money to put them on our benefits. And in many cases, those employees had the benefits they had because of either local differences in benefits or because the industry they were in, which was somewhat different than our core industry, in some cases, the competitors just didn't have that same benefit. That's what you benchmark your benefits to is your local sort of piece. And then where you're competing for labor from an industry standpoint, and I've seen it where HR would just come in and just. Just blah all of that without a lot of strategic thinking and raise your cost basis a ton, erode synergies a ton, and frankly not get a lot for it. The flip side is you're looking again, when I start now talking about the top two or three layers, quite often hardened HR departments will want to force people's titles and stuff like that into the acquiring company's rubric. I so don't recommend that. When I bought Evercore, Those guys had EVP titles. I had some EVPs reporting to me at Express Scripts, but they weren't obviously at the same level. But it was like, titles are free, guys. These guys are being paid to market their titles, speak to customers. Why would we screw up with their titles? But I've seen several times, and it was one of the few footfalls we made early on. The signet merger was we got a little bit hasty at mapping jobs and career architecture for a really good reason, by the way. Because people would say we want to be able to move talent back and forth. And so we've got to have a normalized perspective on people's bonus targets and titling and stuff like that. But I will tell you, there's no prize for doing that quickly at all. And it usually doesn't end well. We had to kind of backtrack, slow it down a little bit. So I think it's that HR stuff. The communications you can't do enough of too quickly. Just be specific, Be really honest and transparent. The HR stuff, take your time, be thoughtful, do your diligence really well. If something's going to cost you money, put it into the diligence number so you're not trying to find it after the merger and suddenly say, maybe we shouldn't do something we know we should do. So all of that, the HR side, I think, could be meaningfully better in some of the acquisitions I saw and where it's gone, well, it was done really well upfront and led all the way through really effectively.

Transparency, collaboration seems like a big driver to making things work well. Ready for story time?

Sure.

I wanted to hear about the Express deal. It was all over the news. It was big news. I got the opportunity to get more of the inside perspective from the beginning and maybe walk through the timeline of events to get a sense of how that deal goes down from the seat of a public company CEO.

It was really fascinating. The context is really important. Express Scripts had just been told by our largest customers that they were not only leaving us, but suing us for billions of dollars for lack of performance in a contract based on what they assessed. We were steadfast that they were not going to win that, and our investors generally believe that. But nonetheless, we were in the process of losing our large customer. We had just told Wall street that that customer comprised somewhere between 20 and 30% of our operating margin. We were still going to be a Fortune 30 company when they left, so we would be fine. And my Job of helping our employees stay focused was probably more important than my job, even with the investors. But nonetheless we were looking to somehow backfill some capacity that a large customer leaving over a two to three year period was going to create. So I was looking for a white label deal. Cigna looked natural. I also did think that Cigna would be an interesting merger partner. We had put it on the game board, but we really hadn't activated it. Then when I bought Evercore though, really brought Cigna back into view and so it brought that. So that was the sort of context for my first meeting with Cigna. On the other hand, had just interestingly, the same customer had a failed merger with Anthem due to regulatory issues and so forth. Both of our companies, for different reasons, were a little bit shell shocked and a little bit not wanting to be in the press for something that wasn't going to work. The last thing David wanted was to try to do another deal that wasn't going to work for sure because he just put his people through a really difficult two year period. The last thing I wanted was the narrative on the street that my company was for sale and that we were somehow damaged goods because of this lost deal. So in that context, and that context is relevant, what does that context do? It means both of us want no leaks. It means both of us want to fast resolution to a decision of whether we should merge the companies or not. It means both of us need to understand the regulatory environment exquisitely well. To make sure that we don't have a footfall there and announce something that we can't actually close on because of regulators means we better know our shareholders well and hopefully we're guiding them along. A narrative about where each individual company is heading. Getting to this point of David and I sitting together, because with all of that earth taken care of, speed can actually happen. And more importantly, you can get into the real substantive depth, which is what we did, of understanding the deal. I first sat down actually not with David, but with Eric Palmer, who was at the time the CFO and a couple of his colleagues. I believe it was either Halloween or the day before in St. Louis. And the idea was to talk about our capabilities and their needs. White label deal, possibly. We had reached out to them through our sales channels. I actually didn't know David. We didn't have a relationship. And from there, two weeks later, myself and my CFO were up in Connecticut. And again, it was kind of a make nice dinner. David was there and we got to know each other at that dinner a Little bit. We talked a lot about the role of physicians, the role our specialty biotech pharmacy played that I had run back in 2006. Play with the relationships with the most valuable patients that you can do the most for and so forth. So then on December 7th, David came to St. Louis and we had dinner together. And he said, so what do you think of the conversations that we've had so far? I said, I think there's a lot we could do for you. He said, I'm thinking something bigger. I had an idea. He was obviously. But I needed David to say that because I wasn't going to be on the acquiring side of this. I had actually tried to do a merger with another large health plan that summer, and they wanted to go another direction. So I didn't want to appear overly anxious. And I also was scared to death of being perceived as being for sale. Our stock in October of that year, just for some perspective, had been $55 a share. The deal we did on March 8 was 97.50. So I was also trying to not rush too quickly because we were starting to come back. We had announced earnings. We were having very good results. Actually, that was the good news, is that we were fundamentally performing very soundly. And so David and I agreed. On the 7th, I had a board meeting. Funny enough, the 8th and 9th. I told them I would talk to my board and give them an indication, but that there could be something interesting here. Interestingly, both of us, the conversation at the table was about regulatory. Of course, we had both done some preliminary regulatory customer overlap. And the good news was because I had health plan customers that might view Cigna as competitor, very few of them. And so the overlap between us was good, which means we were really expanding reach in the market for both companies. And we talked about which bankers leak and we had a shared view. I'm not going to tell your listeners which ones, but I will tell you, it is well known, fair enough, in the healthcare space, which is bankers leak and not. But David and I, we settled on the bankers that we wanted to use if we were to move forward. And we agreed speed would be of the essence. My challenge was I had a board that saw speed as a potential risk because again, the stock price was just rebounding. And so managing a board became very important from both CEOs perspectives. David's board obviously having just had a failed merger and my board having just seen our largest customer leave and not wanting us to be a fire sale, given that we all believe that we had very high intrinsic Value in the longer term. My job was to convince David and his board of that. David and I then sat in a car. So the story's getting interesting from here. We were at the JP Morgan Healthcare Conference the second week of January. So we met December 7th. We had a couple of meetings between December 7th and that meeting with our teams in super secret locations. Amazing, the places that we were hiding. Very small team. And at that point I had hired an investment banker. One of my ideas for your listeners is we offered our investment bankers a 4 basis point, no leak bonus. We did. Now Cigna didn't I? And they got really indignant. They said, well, we never leak. I said, listen, I know you never leak and so that's why you're not going to leak here. But I just want to make sure you never leak. So I want you to talk to your employees, make the team small, lock your windows, lock your doors, lock your filing cabinets, and have as few people for as little time as possible on this. Because if this leaks, I've got a problem, so does David. We don't want to leak. And I'm willing to reward you if it doesn't leak. We hired our bankers. And so the JP Morgan conference, which is every CEO in healthcare in America, goes to the JP Morgan conference in San Francisco. David and I, I met in the backseat of a car, actually, I just sold Wells Fargo. I just met with their CEO in his hotel suite. We flicked our lights. When I got back in the car, his driver flicked his lights and we drove around the corner. He got out of his car, got in the backseat of mine, my driver got out. People we know are walking past the car, but thankfully there were blacked out windows and David gave me the first offer for the company. I looked at it and told him I would talk to my board about it, that I wasn't excited about it, but I thought there was still strategic validity in what we did. Interestingly, not an hour later, a Bloomberg Television piece where I was asked about if someone like Cigna were interested and buying it, made you an offer you couldn't refuse. What would you do? If it's an offer I can't refuse, I can't refuse it. I said, but I believe in our standalone model. So even two hours after getting the offer, I'm on Bloomberg being asked about the hypothetical potential of it and having to just look the other way. So that's January, let's call it 15th plus or minus. We go back and forth a bit. I counter with something that David needed to spend some Real time digesting. He called me back on a Sunday, said he needed some time. He had a few thoughts. One of the things I did in the deal was I asked for a $60 million contribution to the Express Scripts foundation. Because I told him, if we do this MER merger, St. Louis has been left behind so often. Companies have merged and the headquarters have been moved. We needed to send a message to the employees of this combined company that are in St. Louis if we get this combination, that we are there, that we are going to stay engaged. We've delivered on that promise. He was really curious about that, though. That was part of my counter to his counter. The end of February, we were at the point where David was ready to give me what would be a final offer. He was in Arizona for board meeting. I was in St. Louis for an earnings call the next day. We agreed that what we would do is snap a chalk line on the map and we flew our two jets to, yes, it's true. Dodge City, Kansas, at 9 at night in such a small airport, the pilots actually turned the lights on with a radio signal. There's not even a control tower. I don't believe we landed those two planes. Probably the first time in history in Dodge City. There were two private planes out of tarmac. I walked off mine, got on his. We spent about an hour recommitting to the strategy. At our first meeting, we talked about the healthcare system and what we were leaving our kids we could do better and that these two companies. There was a thesis that we both agreed on really early and we sort of talked about that thesis. We talked about where we were at on the numbers. David asked a really smart question of me in terms of. Of process and basically said, listen, I'm willing to give you a final offer today. That literally is more than I think I have to give you in some respects because I think we've got to get this done. And I think there's a lot of value here and I could definitely, probably force something to your shareholders that would be less than I'm about to offer you. But by the same token, I really think this is something we want to do, and I know you do. And he made me an offer. I asked one question about it and we shook hands. March 8th. So this is the end of February. March 8th, we announced the merger. Having had no lease at 9,000, 750 a share, half cash, half Cigna stock, which I thought was undervalued at the time. I'd had to talk my board through some concerns about cigna Cigna's got a heavy commercial book of business as we did. And there was some theory that only growth was going to come out of government, that the payers in the self insured business were going to get out of the business. We never believed that to be true. And today more than ever in today's labor market believe it not to be true. And so then from March until December 20th, when we actually got the deal, when we closed on the deal, we went to work and we put our teams together. And again, that period of time, time is a period of time you can do an awful lot of good to get out of the chute strongly, which is what we really felt the need to do. And so while David and I spent a lot of time with investors, spent a lot of time obviously dealing with the Carl Icahn situation, dealing with regulators, we had teams that were doing everything that wasn't gun jumping, but really being planful about the culture. Stuff you and I just talked about, about talent, about day one activities. Very symbolic what we did. Day one, we had employees in over 20 locations packing backpacks for kids in need to take to school. And we made a $25 million donation to childhood Hunger that day. The combined company did and sent a real message that we were going to be engaged our communities, that we are going to be the kind of company that you would expect us to be, that each company has begun to deliver on in our sovereign states. Again, being highly intentional, very visible as two leaders. Yeah, it was quite a piece. We never had the leak, as I said. So the investment bankers got their money. The shareholders overwhelmingly approved the deal in August of 2018. And then we just moved through the regulatory piece and again, no detail left unturned. You had 50 states or just about 50 that you had to drive approval through and make commitments to and so forth. And we were able to get all that done by the end of the year. And the good news was keep people super focused because both companies were in their sovereign states during 2018, trying to grow, trying to deliver value to the marketplace. And in fact, I had one of the best years I ever had with new business and retention and profitability. The year that we were actually working through a merger, which is to say folks stayed focused on our customers, stayed focused on our patients. Saw that was part of the vision of the combined company was to come out in January, proudly, together, having delivered on our individual promises before we began to deliver on synergies and other things, showed our existing customers in both companies we were not losing focus And I think that maybe is one of the best things that we could say about what happened that year was that our customers were front and center the whole time, which sent their employees a strong message and importantly, those customers a strong message. Honest.

Great story. I love the extent that you went to to make sure there were no leaks. Meeting in the backseat of the car like you're doing a drug deal to the remote location. It was probably the largest in history.

It was an interesting time.

I'm curious to know what was it like presenting this deal to the board? How do you go about that? What are the key things that you're bringing up and some of the questions they had.

I'll speak for my board and express scripts because David's process was obviously not something I had total visibility to. But in my case, I didn't have a split board, thankfully, but I definitely had a board that has some differing opinions. Some thought we were worth quite a bit more than $97.50 a share. If we just sat still, maybe we can even go acquire something else. We had done a good job finding and acquiring Evercore. They had confidence in my leadership, thankfully. The flip side was I had some board members that were looking at, frankly, David's offer prior to 97 50, thinking, given that we were 55 and the loss of our large health plan creates uncertainty. This is certainty. This is good for our shareholders. And so there was some real debate. I actually hired a second investment bank specifically because I was really trying to ensure every one of my board members felt that they were spoken to in a way they understood. And so I used two very different investment bankers. This one had a very good relationship with a couple of very powerful directors on my board. The other had a very long history with several of my most senior members. We had some board members that were new, that were looking to the others to say, how should I be feeling about all this? Of course. And my job was to make sure that everybody felt heard that the deal and the opportunity set was framed both strategically and financially in a way that we could move the debate to the things that matter. Because there's a lot of emotion in these things, as you can imagine, especially among some of the longstanding board members. Finally, I don't know if I can say this. Like I said, I think this may be one of the only deals ever that not only didn't leak of its size, but also where somebody got paid to keep their confidence in terms of the bankers. The third attribute of this deal I think that's fairly unique, is the boards never communicated or met. David and Cordani and I did this entire deal between the two of us. We each had the confidence of our board. We each were doing what we had to do to manage board. In my case, I didn't want David to even think I had a split board or a board that might be more anxious than not. My job was to make sure that I represented all my shareholders with an asset that was valued fairly. And David's job was to make sure that he got what he paid for. His board trusted him. My board trusted me. When David and I shook hands, there had never been a meeting. He insisted a couple times that, hey, listen, out of pure respect, I'd like to talk to George. And I just said, david, if you want to get this deal done, it's you and me. We don't need that. My board doesn't require it. From that perspective, if yours does, let's have that conversation. But otherwise, I don't think so. And I will tell you, Keesan, one of the things in doing the deal that I can't emphasize enough, that has paid off, and it's paid off in every deal that I can. Look at Accredo, we put David Stevens on a board at Medco. Really smart move by David Desno. John Arlotta at Evercore when we bought them. John came onto my leadership team and had a special place on it here. David and I built trust through those months that I told you about about. And I did some things that were intentional, and I think one can be intentional about building trust. There was a point where one of my bankers told me that David thought I was parallel negotiating. And in some respects, it would've been good for me to have David believe that. Maybe it would've made him more nervous and so forth. I actually made a decision unilaterally pick up the phone and call him and say, listen, I know you think I'm parallel negotiating for this particular reason. I'm giving you my word. This deal is the one I want to get done. It's the one my board wants to get done, and I don't want to blow it. So to the extent you are wondering, I want to end it now. You have no idea how much that meant to Dave. And I told him, you have my word. You have my word. You will not hear that I'm parallel, because I am not. I have already done my outreaches long before this point because I was obligated to on part of my shareholders. But, David, this is the deal. And 100% plus of my energy and that of my entire team and that of the two bankers I'm working on are to get this deal framed and done. Huge trust builder. And there are a number of those things each of us with the other small things. In some cases we never ever blew an appointment time for a phone call or something else. Simple things like that. The building of a trust, it's iterated. If you view the process of getting to a deal as an opportunity to build trust, particularly a vertical deal like this where you really do want people to stay and be part of the new team, it can't be done enough. Because the byproduct of that was this. David in telling his team through this three month process and me in the acquired company telling my team how things were playing out, a very small team was only reinforcing a positive narrative because it was a narrative of trust. It was a narrative of reciprocal. It was a narrative of shared value ideas and creation that we were going to be part of. Not just that we were giving the company over to them. That made all the difference in creating the hearts and minds that ultimately came together in December of 2018.

Great example of building trust is key. You mentioned Carl Icahn earlier. I just finished reading Michael Dell's bio and he had his perspective of dealing with Carl Icahn on his take private deal of Dell. I'm curious to hear your story of dealing with Carl Icahn on your deal.

It's tough for me because Carl and his company were and are a customer of Express Scripts and now Cigna Evernor and they were a great customer. His chief administrative officer is actually a pretty darn good friend of mine. We didn't talk for about four months. Not because we didn't want to talk, but because it wasn't appropriate. Listen, I got nothing but respect for Carl. Carl has done a lot of value creation over a long period of time. So I would not ever, I'm going to quote a very well known hedge fund guy that I'm very good friends with that he said if Carl Icahn pulls up at the poker table, I would prefer to go to another table. That wasn't my choice or David's choice. Carl, Carol got what I would say is this one of his rare. I would say I don't think it was a miscalculation actually. I think if he'd known everything that was to be known, he wouldn't have come out against the deal. He wanted to see David and Cigna do something that was highly value creating which he's right to want to see that. The concern was that our business was existentially threatened. The PBM business has always been in the crosshairs because we create a lot of value which means very large industry groups such as pharma lines up and try to create a narrative about the industry on our worst days that can cause all sorts of questions to be raised. By the way, I'd also say some of the most valuable creative things we've ever done have been with pharma and retail. But it's that sort of yin and yang of the relationship and the industries. Carl had bought into, I think some extent the threat and remember we were losing our largest client. You could point to facts that would have said wow, Express Scripts is a troubled asset. Cordini and his team rightly saw. And that's why I stayed three years. I couldn't have stayed three years if I thought they were buying a dog. I wasn't going to walk in that boardroom every quarter and look like a monkey. It's the opposite. I was proud every time I walked in the boardroom. I said, you guys bought a great company. Look at this. We've grown at 10% plus a year for the last three years since the merger. 100 billion plus dollar company that never happened. And so from my perspective, they did buy a great company. Carl just didn't have all his facts and I think he had an analyst that did very poor work and he found out that he actually couldn't create the amount of shareholder accumulation ahead of a vote that he thought he could because of the dates were not as understood by his analysts as they should have been to the extent he would have maintained energy after getting the rest of the facts. He actually didn't have the platform that he would normal normally have had because he was late on our deal. The good news was though, at the end of the day, shareholders have to vote and they got to see front row that Carl didn't like the deal. He did, as I said, ultimately back off, probably made a bunch of money on the deal. It's compelling and appropriate that Cigna shareholders, over 90% of them voted for the deal. So they saw the strategic piece and that's because David did a spend his job out meeting with and talking with investors and he and I did a lot together. And again, I think it spoke volumes to our leaders and to the investors and to our customers, customers that I was staying. I signed up as fast as I could so I could send that message that I was 100% committed and believed in this combination and ultimately, thankfully there were some very large institutional investors that were watching very carefully, quizzed us very hard and didn't see us blink and ultimately supported the deal. Also, ISS and Glass Lewis both supported the deal ultimately, which was huge because there was a question about that as well.

What are the biggest challenges in the deal?

The big challenges are always cultural. No matter how great a job you do on culture, I think we did a tremendous job. You still have in early days, folks sometimes playing wait and see on the side of the express scripts folks or pointing into the things that may not have been exactly as people would have hoped. Some of the early HR stuff, in hindsight we would have done it differently. I think the one thing I would recommend in a situation like this, and it's funny enough it's how I made my career in large part of PepsiCo is in hindsight given a deal this big, I think, and I think David would agree, sending physically to St. Louis and posting up a full time super senior HR leader to help back and forth with translation would have been very helpful. It's much harder to do. We had a really good person engaged, but he was part time that part time this. He lived in the northeast rather than St. Louis. So he'd dip in and dip out. In my experience of being the guy, whether it was as the HR guy in my Pepsi days or at Accredo as the CEO, frankly, what I did at Accredo as CEO is what I did as an HR guy at Pepsi, which was get in and map the differences in terms of all the HR systems and processes and find alignment for all of that in a way that people feel engaged in and part of rather than just have it done to them. We lost some of that opportunity early on and it took some time to recover. We're fortunate we took kept most of our leaders. Our retention in this deal has been very high because the vision was so clear. David and I did get that part right. David really got it right. The HR thing is where these things are more than likely going to live or die. The financial thesis will always be approximately right. The market need, if you've got it understood, will always be approximately right. It all comes down to the people. And again, I just think as much as we did, we could have even done a bit more there.

That's great. The HR M and a practitioner is listening in. Appreciate that.

Yeah, it's critical man.

What do you think made the acquisition successful?

Again, it's preparation. The things that we did in that period of time before the Closure that kept us in good stand with customers, kept us in good stand with our employees, help folks understand what we're going to do, got them excited about launching brand new products into the market. Products that by the way required both parts of the platform. I think that's the really magical piece is we showed the promise of the thing really early to everybody, legislators, customers, employees. For example, we've launched a thing called MP Embark. And Embark was for the first time ever, basically a thing where small to mid size or any size, employers, governments, unions could at a no profit to us premium, defray their risk of the new gene therapies that were coming out that were million and a half, $2 million to cure blindness or a particular spinal condition in babies. And these small to mid size self insured employers were scared to death that they'd get one or two of those babies and it would wipe out their benefits plan. And for a very low. Because there was no profit in it. And because we're able to underwrite it really well. Well, because of Cigna's brilliant in underwriting, we went and basically said, listen, all you got to do is pay us a PMPM member per month fee. That's very modest. It was less than 10 bucks. And if you get one of these, you get 10 of them. Guess what? It's totally covered. Not only that, your patient will get it the day they get asked for. There won't be any hoops and ladders they got to go through. And then we took that to pharma and we said, listen, but these drugs are going to be really pushed back on by payers who can't afford them. We are going to offer you great access, but you've got to price them fairly. You got to work with us in terms of these and you got to give us a guarantee that they work for some period of time. Time will be the chassis that can monitor those patients. And so we actually created value for the pharma companies, for the patients and for the payers combined. Two companies, day 60 after the merger that sent a very powerful message about why this combination would and could make sense. And then launching Evernorth about a year and a half later as a go to market services brand to send the message, hey, this isn't just Cigna Pharmacy and Cigna Medical benefits. This is a company that is intentional about serving the healthcare marketplace place again. Those things that are highly symbolic really do matter to customers and your employees.

For someone that's been acquired twice, what's the role of the CEO in an Acquired business.

You've got to be the chief cheerleader. You got to be the chief communications officer. You got to be the chief strategist. You've got to be the one that keeps your board excited. Man, oh, man. The hard ride my board gave me to buy Evercore was amazing. They were right. They were correct to be concerned. Any blinking that I would have done, that deal would not have been approved by my board. And I think that's true of this merger. I think David's board never saw David blink. My board never saw me blink. Your role is you have be owning and driving. I remember in 2007, when I was running Accredo, we really wanted to move into oncology, and there was a particular asset that was out on the market, and pretty good asset. And I had looked at it, and I looked at it some more, and I, in my heart, didn't think it was a good fit for us. I didn't think it was going to perform. I didn't like the thesis, and I turned out to be right, which is awesome in hindsight, but at the time, I didn't know that. But I went into my boss's office, and one of the bigger mistakes I made in the role is I went in and I said, I've got an idea. I think we can buy X. And I named the company. And he said, you think you can buy it, or you're excited to buy it? You're passionate about what you think you can do with it? I said, no, David, you want an oncology strategy, I think could give us a footprint. And, you know, and I equivocated. And I was a fairly new CEO at the time at Accredo. And he basically said to me, listen, if you're not going to exude passion for this, why should I with the board? And I thought, he's right. And I don't. There's a lot about this I don't like. And we pulled the reins in that, and we let it go by. And again, it turns out that was a good thing. We didn't buy it. In fact, I think three of the best deals I ever did are the ones I didn't do. But that was my big learning is as the CEO, you have got to believe it. It's not sufficient that your people are excited. You have to internalize it. You have to spend the time on it. You have to own it.

How do you lead your people to embrace the acquisition?

Sometimes they got to see you be willing to walk on something that they're split on. They saw Me walk on a couple things where I had people in the room that were pretty excited, but we couldn't get a consensus and I couldn't get excited. And so they saw that I was willing to walk. I was not a micromanager, but I was certainly a hands on CEO. And I wanted details and I wanted to ask questions. George Paz was brilliant at that. And I learned that at his foot to some extent when I joined Express Scripts. He was relentless. And the only meeting with George that was worse than a meeting with bad news was a meeting with good news because George never trusted it. And he would just go deep and deep to find the bad news that you hadn't found yet. That's not a bad process. When you're looking to spend your shareholders money or your investors money on something that theoretically should add more value than doing something organically. You had better believe in it and you had better have gone deep on it yourself as a leader. Because you don't get to say, wow, I wish I had known that afterward. You live with the consequences. And so for me, as a leader, you show your team that you're going to be asking questions that they better do their work twice. I remember a great quote from Henry Kissinger when asked when somebody gave him something as a piece of staff, staff work, his question was, is this good enough for me to put on the president's desk? And inevitably somebody say, let me take it and work it a little bit harder. And I think it's really important to force people to be really deep in their thinking. Let's go to the negatives, let's go to why this won't work. Let's talk about that now and talk about mitigation. Let's talk about the culture differences now. They're not going to get easier to manage or better once we sign the deal and see how people have thought things through and how committed they are to it. Because no matter how committed you are as a CEO, you won't make it successful if your team's not committed.

Really great point. You got to get the whole team on board. Joey, recap the key tips for making acquisitions successful.

The bottom line is it is for me, preparation. It's knowing yourself well and being honest about yourself with your culture, your values, your strengths. It's about knowing your leaders. Are they ready to be part of a company that's making an acquisition? Because it distracts. It takes time, it takes focus, it takes real leadership from a standpoint of really understanding the cultures and being intentional. It doesn't mean you can't put companies together that have different cultures or even different values. It means you better be honest with yourself about what the implications of that are and how you're going to manage them upfront and who's going to probably succeed and who's not. The role of HR cannot be understated in helping both you as a leader and your team in mapping a process to quickly moving into a new normal. Generally speaking, the stuff you've got to do, you should do, and you shouldn't be a denier about that. You shouldn't try to make apologies for it. You should simply pull the band aid off on things where you're going to have to pull the band aid off. I remember at a credo, we wanted to let people keep a logo, and it was like, no, we're not going to do that. And so we're not going to do that starting now. But the flip side is we that name now for 20 years, and we'll probably keep it longer. The commitments that we made, very good. But don't ever commit to not making change. People need to be ready for change. What they need to know is how you're going to communicate, how they can tap into information, and they need to believe that the information is credible and that what you say is what you do.

Have you ever walked away from a deal because of culture?

I did. I walked away from one that actually my board was pretty interested in. My team was really excited about. And the reason was is they had a culture, specifically a culture culture that was known to be very loose from a regulatory and compliance standpoint. And they were touching patients. It was known that they had cleaned up or the words that were being used about this company cleaned up a lot of that. And so I had dinner with the CEO, and we were a pretty natural buyer. I said, I want to understand where you're at in that process because you're getting a lot of credit for cleaning it up. And if we diligence you, we're obviously going to see some of that. But tell me, how far along in that cleanup are you? He said, we're probably 70% along. And I went, oh, okay. The deal died at that moment for me because I thought, I'm not going to be smart enough to find a 30% that's too hard for you to fix. And that means also, you don't have people really evangelizing around this need to transform. You're just cleaning it up the best you have to get it sold. And what I'll say about that is I've watched that acquisition subsequently and it was a major, in the billions of dollars, major value destroyer for the acquirer. I'm not going to say it was all due to that, but I'm just going to say that it's not that we shouldn't have bought it necessarily. It's that we would have had to have our eyes wide open. Open to how big the challenge was in front of us. And we didn't have the bandwidth to do that at the time. So we passed.

It's a great example.

It would have been easy for me to sell it to my board. All the financials on paper look brilliant. The synergies were all conceptually there. Again, it takes people to get synergy General. It takes people to keep the customers. Takes people to believe in the mission. If you don't see a pathway through to that, it's very hard to succeed.

Called it right. Dodged a bullet. Tim, what's the craziest thing you've seen in M and A?

At one level, I think the JP Morgan conference, David Cordani and I sitting in the backseat of a car having this clandestine lights flashed each other, security drivers getting out of the car, CEOs of major health plans walking right past us, not realizing this transaction is occurring right in front of their eyeballs. It's pretty crazy, but I would tell you, I actually think it's the message that I would give, particularly the larger companies in your audience. I think the craziest thing I've seen is that somebody would take a 26 year old kid, me, send it in the middle of a newly acquired business that was underperforming, had a union campaign and was in the middle of nowhere, but by the same total gave me the chance to actually show what I could do in aligning that business to our corporation, which I had demonstrated in other spots. The message for that is it's crazy. It was my encouragement to my CIGNA colleagues on my retirement was trust big. One of the really cool things about a merger or an acquisition, where you make an acquisition. It is a chance to identify a couple of your up and coming leaders and find a very different muscle for them to stretch. And you will learn so much more about them, I can promise you. I would not have been sitting here today as the CEO of Expression Scripts and ultimately Evernor had I not been thrown in the deep water early into these novel situations that required really good people sensitivity, really good thoughtful process, really good alignment to the strategy and the value. And most of that wasn't learned in the classroom that is simply seat of the pants stuff that you learn because you got to. It's a really cool opportunity for a lot of companies when you make an acquisition. We've done this at Express Scripts to I can think of a young man who I love, but he'd always been in the strategy vert and then we bought this particular small company and I was able to have him sit on top of that and run that as a portfolio company. And he learned a ton. But more importantly, we learned a ton about him and it succeeded. He wouldn't have gone all the way in the ditch. We would have stopped for that. He never even knew that the all wheel drive engaged because he was just driving it so well himself. And I think that's the craziest thing I've seen is also the smartest thing I've seen, which is take someone, take a risk on them. If they have the right values, if they have really good intellect, if they have really good commitment to the strategy of the business and good mentorship, somebody they can talk to when it's a dark and throw them in the deep water and make them part of it because they'll really endear themselves to the other folks. They'll be okay sharing power or maybe some of your most senior people may not be. And all of that's the kind of stuff that'll ultimately make a management team that you've just acquired much more likely to be successful and to really love being part of your company.

Completely agree. That's a practice our industry needs.

Yeah, it really is.

Tim, thank you so much for your time today. I appreciate it. Enjoyed this conversation and learned a lot.

Thanks. I appreciate you having me on, giving me a chance to reminisce a bit and and I'll look forward to your future guests and hearing the stuff that I should have learned over the last 40 years but didn't quite yet.

Absolutely. Here's to the deal.

Here's to the deal.

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