The Art of Executing Programmatic M&A

Emerson Block, Cardinal Health, Broadcom Toast, Energizer Jam, Treehouse Food, Hora Main there's too many to list. What do the best corporate development teams in the world have in common? They use Deal Room, Add a crappy data room and Excel trackers. In 2021, Emerson did an $11 billion acquisition on Deal Room. Then this year, a $14 billion platform divestiture to Blackstone. Even with every big bank name involved in the deal, they all had to use Deal Room. Learn why the best in MA combine diligence and integration into one workflow so they can get both diligence and integration done faster. To execute M and A like the Best, you have to know how to use Deal Room. See for yourself@dealroom.net Again, that's dealroom.net let's get to the interview. 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 M and A Deals. Foreign A Scientist welcome to the M and A Science Podcast where we learn from the best in M and A to uncover proven techniques for enterprise value creation. If you're interested in learning more on how to optimize your M and A practice, or want to get involved with our community of forward thinking M and a practitioners, visit mascience.com and subscribe to our free weekly newsletter. If you want to keep up with us on the go, head over to LinkedIn and follow M and A Science. I'm your host and chief M and A scientist, Kisam Patel. Today I'm joined by Wolfgang Shank, VP of M& A at Belden. Belden is a global company specializing in design, manufacturing, distribution of end to end networking, security and connectivity products and solutions traded on NYSE under BDC and also the Frankfurt Exchange under qcta. Today we're going to talk about the art of executing programmatic M and A. Wolfgang, how are you doing?

I'm doing fine, thank you. Kishon. Welcome to Germany. By the way, you are in our headquarter in our European headquarter in Necker Tensling in Germany.

We're here just outside of Stuttgart.

Yep.

Thank you for hosting Guten Tag V Gates.

Thank you Sven.

I appreciate taking the time. We got a nice factory tour. I'm fired up to have this interview. Can we kick things off a little bit about your background?

My background? So I'm actually a telecommunications engineer. I was growing up in this area where we are today. I call myself A Networker for over 40 years. Networker, why? So I pioneered a bit. I was joining this Hirschmann company today part of Belgium, when Ethernet went to fiber optics. When fiber optics as the first company, we developed this for the world. We replaced first coaxial cable parts. I pioneered later bringing Ethernet into the industry. Industrial applications being today the most important bus system there we founded an organization Industrial Automation open networking alliance IAONA in the late 90s. In my roles today I'm managing director of all Belden facilities in Germany and operational joint introduced me as a director or the vice president for global M and A activities inside Belgium.

Your background's interesting because it's unique. You actually came up through the industry and which you clearly demonstrated to me today. You know the industry in and out. I'm curious about that. In terms of your personal experience transitioning from the business management, the sales side and now into M and A. Obviously there's some benefits like you know the business, what's your view and the strengths that you bring from that and or maybe some of the learning curves you had to overcome.

This is a bit, let's say the career step, which you do when you start with a startup. And actually when I joined Hirschmann, this was not really a startup, Hirschmann itself, but the business inside Hirschmann was created as the first solutions oriented fiber optic applications for industrial environments. And there I had a perfect background in my studies. I was falling in love with fiber optic communication, light transmission of information by light. And this was the first company bringing this. And then of course is a long path going through different steps in this career, being more and more financial driven and interested in things. Not necessarily planned, but a very good development still for me today the good industrial environment, I think it is okay and fine if you have the complete technical background. And especially now in my new role, I know the companies, I know the market, I know the customers. And this is a perfect background. And I have a very nice and good support for the financial background and the financial simulation and white paper building and also tools are supporting us in this case.

It's a different way of looking at it, of just progressing within your business career in the business, as opposed to coming up purely from one area of finance.

And the customer plays an important role in this whole context. And we are today here in the Customer Innovation Center Stuttgart. And this one goes also back to big steps in my career or important steps. Let me say I was the first employee of the Customer innovation center almost 40 years back. Went from service to marketing and sales responsibilities to Purely sales, then general management operations tactics. I have several masters in lean enterprise black belts there. So it developed and was never a boring day within the last 40 years.

Let's talk about engineering the M and A process. Yeah, we've talked about this term about programmatic M and A. I want to first understand what is your definition of programmatic M and A and how do you see things have evolved from the way you previously did M and A versus to how you let's call it re engineered M and A in your company.

The question is what was this used to be traditional M and A approach. It is an opportunistic approach. So companies are coming to the market and you are checking if they are fitting to you. It's opportunity driven by random access. And of course they need to fit to your strategic scores and to your programs and to your markets. The programmatic approach is a more systematical one. Yeah. And therefore let's say the very first important step was that while we were before with three platforms or three to five platforms inside Belden opportunistic driven out of these five platforms we merged to one single common reference architecture. Our complete data communications, data acquisition and transmission and data orchestration and management portfolio. Described it clearly and then could identify in this customer or common reference architecture our gaps. And now we are searching exactly along our gaps for full Belden in one search profile and with the same tool set below. This is the important step. Yeah. So gap analysis and strategic positioning. We have exactly defined 13 vertical markets which we are focusing on. And we have use cases within these 13 vertical markets. And there we are have a clear search by for exactly this. This is the one step. And the second one is supported by tools supported by a very good workflow documentation. And with that demand driven by our internal customers. The new programmatic approach.

Just want to make sure I got that in terms of defining the programmatic approaches. Sounds like strategy really is a core driver that that became much more defined. That allows you to I guess have more attention or find opportunities and know exactly where they fit in in that strategy.

Yeah.

And then you have the whole workflow itself. That sounds like it's become more defined as well.

You got it completely. And let me add one more piece to this strategy. Because before you are components or products oriented company and you can add to a component or a product portfolio. You can add piece by piece without any critical topic within the strategy change was going through more solutions or in the business very clear use solutions in these before mentioned use cases. And with that is also a Higher variation of different companies, talents, targets, operation capabilities is a broader portfolio than just adding products and grow inorganically. And we have also as a programmatic point that we try to do one acquisition per quarter so within a higher frequency where we had before, let's say one a year.

But is it because you have these things in place that allows you to do it? Or is it just we have goals to go push more?

Let's say driven by goals, driven by strategy, but was very important to set up the tools to be ready to do and to support this and to have a very good database and an overview workflows defined. So it's combined. But let's say the first idea was a strategy and a solutions oriented business. And there is belt and Uniq to deliver a better data communication solutions from A to B without any breaks from a connector. And we saw it in production today from a connector from a cable to a switch, to a wireless connectivity, to firewalls, a completely safe and high available reliable data infrastructure.

That was the vision. And then here you're exercising M and A to fill in any of those gaps that you can provide all those solutions. What was the driver of moving and evolving to be more programmatic in your M and A approach? Was it the goals itself? What prompted you to make those changes?

The driver was in fact the strategy and reorientation to solutions. Business and solutions is also supported by services, by trainings, by people, bringing people together, doing proof of concepts, validation tests, bringing organizations together, doing blood fests. So this is the driver and with that A the higher frequency B the perfect fit into the solutions portfolio is a bit surrounded by building an eco partner system. In addition and out of this eco partnering and joint venturing and working together is maybe also a pool that's leading and that has an inflow into our M and A funnel. So this is. But the approaches make more money by offering solutions and not just products.

What are the pros and cons of programmatic M and A?

The pros are of course a perfect fit to strategy and closing gaps and having a really solutions part. Your internal customers are motivated, are with you and you have a regular inflow and it needs to be supported by regular discussions with the internal owners of the business. And it is also a holistic approach. I did not talk so far that it's not only find the right company, go into cultivation, go into due diligence doing this successfully, sign and close. It's also the process that's falling after the integration process and all over this complete period of Time you need to be perfectly prepared and ready. This is in the programmatic approach right now. Also our focus to improve integration. In addition, and to have there successful. You might know that 80% of all acquisitions all over the world are failing due to bad integration. There is not really a con. What I see is of course it requires you to work very disciplined to stay day by day in the business. This is from my point of view the only topic which you could call a con, if there is at all a con.

You can't be lazy. You have to do the work.

Exactly. Yeah. You need to be awake day and night. And the discipline tracking of systems is a very important part.

Okay, so I'm gonna add like connecting the life cycle. Cause I feel like we have strategy to the point that it is fairly clearly defined. That helps you fit opportunities in rather quickly. And then there's this workflow and tools that you have your teams aligned on. And then ultimately there's connecting the whole life cycle end to end through integration.

Yep.

Which comes up in these interviews quite a bit. If you're like teach me just how to get my thinking right because I'm pretty early in our business and shifting from working in the business to on the business. What advice would you give to me just to kind of wrap my. Because I feel like everybody has such a different view around thinking about strategy. And obviously it's a very different business to business. But do you have some philosophy I can grab on just so I can get my head in the right way of thinking about strategy for even my own business?

The very first one is challenge it every day by day, but don't change it day by day. This is the second part of the advice. We are working with three year stretchman periods and there are other companies having longer ones. Five 1. I think three years is a good one. But also they're important that you do not write any year a new strategy. That you really continue and track these three year periods. But as I said before, challenging it day by day and then drive the definition through talking a lot to customers. Voice of customers needs to be the most important inflow into your strategy. The demand, the pain point, the need on the customer side. And this actually really changed in our business. In automation business where companies were very successful with individual product solutions with highly sophisticated developments. But no interoperability, no end to end solution. No if it came into a production and there was a malfunction or a problem, the customer had a problem. To get the right responsible person to find the one who integrates the whole things. And this is a bit the advice to your strategy. Drive it from demand and voice of customer and follow these topics. Make your own position. Bring in your ideas. They are waiting and they're expecting from you new ideas and input. But be there in a very close and aligned process with the customers.

Like that. Building your strategy around the voice of customer.

Yep.

So everybody does a version of this exercise. And you have a vision of being number one in your market. Even a grander vision of connecting the pieces to be number one. How do you go about challenging that daily? What's the mindset or approach to do that?

It is indeed also hear the customer voice and the feedback there. You need to measure this a bit more than just asking. You need to track really loyalty of your customers and this feedback. And there you get also the feedback of where maybe today you have gaps in your portfolio and in your strategy has all to do interaction. Bringing people together, talking to each other. And customer end users is the one you need to rely also on your channel partners. Those who are helping you to be overall in an ecosystem. I mentioned this before being successful.

I feel like a lot of that. I guess you get a blend. You get this information from customers and partners that can help shape organic development of your business.

Yeah.

And then that probably helps you identify where there's things you could improve in your business. But then I guess you're taking that same information and building around here's this vision where M and A may fit to drive and help achieve those goals. That's a lot of information like how do you manage? Because I guess I feel like you're going to end up working with different team members on all this different feedback. And other people are going to get feedback from other customers. I'm just trying to say how do you get efficient. I want to learn more of the German way of doing these things. Because this is a. I feel like such a scramble and a challenge of its own.

The German way is planning and documentation and collecting information and bringing them into database and doing analysis. Sometimes a bit too slow. So it's maybe also planning is replacing the misleading things by accident. So not too much planning but documentation and structured approach is an important part. And therefore you need tools. You need tools to collect the data. You need to do simulation of what can happen. What impacts do you have? What happens if this occurs? For example a special impact. And things like this you need to go through but very well along a defined process than a standardized process. Everybody in your community or in your workflow is completely Aligned with.

If I were to step back, can you tell me about the kind of team and resources that are necessary to successfully execute more of a programmatic M and A strategy?

It's not good to have bankers only. It's not good to have lawyers only. They are all specialists in their areas. You need to have people understanding the market. And this comes back to bit to my career steps and my development. And indeed my core team is people coming from the market, people who had experience prior to that in R and D, in product management, in vertical market management, knowing the market and knowing the people in the market, connecting to a network of advisors where hundreds are around the world. We call them the M and A managers, the M and A funnel managers, the inflow part. You need to have a strong finance backup. And as there was talking about modeling and simulation, of course you need to have a tool manager, a process manager. You have someone who's doing a continuous improvement on the tools itself. And what's mostly missing is a bit then after, let's say a very good cultivation period, a good due diligence period, collecting data, documenting things, it comes to the final signing. You have very perfect legal support there, you sign and you close a deal and then it stops. And dedicated integration resources is the last pillar I'd like to add to your, to the answer to your question. And there we see, let's say the biggest gaps. Maybe it's not those in the business areas like the product management R and D processes, not in the procurement things, operational things. It is there IT infrastructure that very often has to do big steps. And it's the HR cultural thing where you need to have dedicated people supporting you. And this is part of our, maybe right now, the most important part of our programmatic M and A approach to improve this segment as well.

That's a lot of people. Again, you mentioned the people. You're using a lot of folks to get a diversified view. And the model impacts simulation you mentioned, let's say you're identifying an opportunity to go through an approach of identifying an opportunity and evaluating it. How do you do that with this collaboration? If you got this globalized team, everyone's spread out and being able to like take these collective ideas and organize it in a way that you can act on it.

First of all, having the knowledge, knowing the market. So already, let's say not going from Greenfield from scratch. So you have people who understand and know the market and can also immediately identify a bit the gaps. Then it's a lot of research, it's a lot of connection to what's going on in the market, what's happening, where is something in the move and what we are practicing then is we have our funnel, we have the potential targets and we have a very open funnel. Discussions with our internal customers, with those who have these gaps to fill in the dish Together with us, this is our most important part. Weekly tracked also with a lot of discipline. And then let's say the rest is this workflow and bringing all together as information in a tool, tracking it there maybe there's first ideas to add even here a bit more than just discipline working and collecting data as something which we let's say starting to think of.

That's a lot of moving parts. What does it look like when you ultimately organize this information? You mentioned tools. Who put the disclaimer here? I know you're a deal room customer.

Yeah, that's right.

And obviously I don't want to limit the conversation to that. And the goal isn't just make a big commercial plug out of it. So feel open to speak about any tools that you're using. But what does it ultimately look like when you're getting all this data, all these input, all these ideas, global team, how does that ultimately converge into something that you're analyzing to go act on?

In addition to build room as a tool, let's say the full end to end M and a process where we might also as I said before, improve towards integration and also supporting, let's say the documentation within. You need to have also be tools where you get immediately access to information of companies being available databases and information to this.

But what do you use for that? You need good data sources for that.

Yeah, this is another service use Pitchbook.

Okay. Window Pitchfork.

Let's say we did trials also with there with the first AI tools in the market. But there we are not yet completely happy. It's still based a lot on our own research and there is of course improvements possible. But I see also progress there.

I like it that you're continuously evaluating these other tools out there, especially emerging AI tools and being opportunistic there. So you use data tools, do some research. So you find a lead on a company, you can expand the research, give more information. Then what?

Then we hopefully acquire success. A very hot workload period during a due diligence. There's this other challenge when you are international company. To do this over different time zones requires very good alignment on timings and things like this. But there might be some areas where we could expect more support from a tool. So when we collected data that a tool is walking through this, sorting it, prioritizing it, supporting our documentation, supporting us. We talked about already a white paper.

Generator, and then we're giving up our secrets. Some fun stuff we're working on.

Yeah. Is it like to hear this when you're working on ideas like, oh, that's.

Why I love working with your team. We talk about the ways of working with Germans, but I was actually telling your colleague Oleg, I said, if you can make a German customer happy, you can make anybody happy.

Most critical ones. You think, okay, possibly. Yeah.

Yeah. People say, oh, it could be tough to work with. Oh, no, it's actually a good thing. I like to say think philosophy and don't take anybody this personal listening to this. But in America, we tend to get things done as fast as possible, and as long as it's 70% quality there, you're fine.

Yeah.

But I think the German culture is, get it up to 98% or better quality, it's good. If you can make a German customer happy, you can make anybody happy.

Okay, let's try to do it together.

That's right. Yeah, we're still working on it.

Yeah.

You have the data tools. You mentioned tools. And the reason I bring it up, because you did make that point of, like, continuous improvement on tools, which I do think is something I've noticed, even working with your team, that there's always this proactive, here's feedback, here's constant building out workflows where a lot of teams don't do that. I'm tying it together. I'm like, is this part of this what you define as a programmatic approach of like, really keep continuously evolving your process and you're doing it in the tool, as a platform, you keep adding all the different workflows and steps in there. Am I missing it or is it something else that goes beyond that?

Nothing is as consistent as the change. This is a bit the challenge. So you have tools, you have processes, you have everything following your documentation. But organization is understanding. And with every acquisitions, by the way, you have new inflow, you have choose for the best of both sides a bit. And not just roll it over, bulldoze it over, as many of the companies are doing this. And with that, you need to regularly adjust. And this is maybe a bit. Yeah. At least it's a challenge, not a risk to failure. It is a challenge. And the very first thing is you need to know exactly how to measure success. This is an important part. People are changing, organizations are changing, responsibilities are changing. And this is in a regular way. And with that I see this also even in my programmatic M and A approach as let's say the hardest part to follow and to track.

Could you give me an example of. You've seen this before you you had this initiative you kicked off. Can you give me an example of like hey here's how we typically did a deal before you know the good and bad. Then after we've instituted and re engineered to more of a programmatic approach kind of a similar example and what what the pros and cons are.

Let's say not yet completely but in in the pre stage final management approach is very clear that we have our last acquisition or last signing which we did we could managed to do within a six weeks due diligence period where this would have been without tool and support and structural approach never been possible before. What I need to develop further now and to improve is the integration the business and there we are still challenged to have this perfectly under control. So the sequence, the frequency of the inflow of the deals we are doing right now is a significant improving part of and then hopefully in future integration as well.

So you've seen an improvement in speed of due diligence and right now the goal is improving integration. What's the plan? How are you going to do that?

The plan is dedicated resources at least for core processes and the core processes I identified earlier a bit biggest challenge is it where it can take years right now in our organization to bring things together. You don't need to integrate everything immediately but especially if it's coming to reporting structure to numbers and to have workflows in ordering I was talking about we would like to sell solutions with that. One of the very first targets is a customer places one order to belt and not five orders. One to the cable company, one to the connector company, one to the switches, one to the software parts and so on. So dedicated resources for IT and the HR processes and the transformational cultural change things are important to be supported as well. This is what we are focusing now with in integration process.

I'm curious about as you talk about basically connecting the process end to end. Is there anything. This is almost like leadership enabling the collaboration, the alignment. I feel like that's one of the big challenges I always hear about is distributed team, a lot of people involved. How do you keep these team members aligned on the highest priority tasks throughout the process.

Also here talking to each other regularly. We as a team, first of all our core team M and a core team meets three times a Week, three times a week. But it's more kind of a meeting for coffee. We call it a virtual coffee break. Yeah.

Okay.

And then we have a bi weekly regular two hours meeting where we align these activities with the extended teams in the due diligence. There is also weekly report outs and regular sessions. Talking to each other is the main topic.

Well so okay, the coffee break. Is there an agenda? Hey, what's up to over there?

It has no agenda but every time it has an agenda. So there is no fixed agenda but it's topics everybody's bringing in and what's highest demand. And it works quite structured. It works really like you are standing in the kitchen and drinking a coffee or tea with your peer and exchanging information.

I'm thinking and I'm trying to get a sense of how different or similar it is to the typical software standup meetings.

Yeah.

Where you go around quickly and it's. This is what I've done since last time we got together. This is what I plan to do before the next time I get together. And these are the bottlenecks I'm running across. But it sounds like it's even less.

It's even less. It's less than this. But this is already good. Okay. From agile to bring something this in. This is a bit more how we approach our bi weekly, the biweekly we have with a standard agenda with topics like this.

I was expecting more engineering.

I don't know why, but yeah.

And then the bi weekly sounds like that's more. Is that pipeline review and is that. Yeah, I guess you have more than the pipeline. You have pipeline in flight and integration.

Yeah. Into the projects right now. Different strategy. That's absolutely all the same. Yeah.

M and A group is one group. When you look at adding the integration resources they're going to be within corporate development on a completely separate team.

Yeah, but within. So we will have it within this corporate development group.

Yeah, that's good. You want to keep everything connected.

Let's say we have today Belt and itself is also evolving here we had, I was mentioning before three to five, even five different platforms. Today we have just two businesses and with that is a bit clearer the dedication of the individual people.

Yeah, I think that's a great approach. Measuring success of a programmatic M and A strategy. What are the most important metrics?

Changed. Changed a bit. And there is right now. So Belden gave a commitment to the market. Belden is an industrial company, is a strategic investor. The commitment to the market was that we will achieve $8 earnings per share in next year 2025. So highest priority to measure success and to identify our targets already and to bring them in is earnings per share target which we are having as a leading indicator and of course is a second important one. If we are doing an investment we would like to deliver a return on invest from day one on and in year three it should be 13%. This is our what we are targeting and this is the two main topics. Of course I measure in addition my funnel inflow my final target given the acquisition targets. So this we do almost tracking like a sales funnel. This measurements according to lead times and close rates and things like this. Additional topics and the business itself of course measures against things we defined in white paper. There's a lot of synergies and development criteria, joint roadmap steps which are measured there. So there is let's say a set finally for an integration stands a set of 50 to 70 individual KPIs which I do not have to track the individual groups functions are tracking.

You're such a public company. This is.

Yeah, yeah.

So let's take like here's an opportunity to acquire a company and you have to build a business case to present to the board. Your main goal is to tie it to that $8 EPS goal. Does that sound like you want to build of hey, this is why we're buying the company. It's how it fits to the broader strategy so we can get get closer to our end to end solution goal. Given that this is what our target is, this is how we feel it's going to impact our share price or get us closer to the earnings per share goal.

This seems to be a purely financial driven topic. But of course this is clearly identifying also the fit to our strategy and to our gaps closing in the solutions portfolio. It is a bit more challenging if it's acquisition of just talent for example or just a technology. But even there we have already from the early beginning a clear driven business case that supports our future solutions portfolio.

The thing I think is strange is like EPS would be so much factored more on market perception because that's what determines your share price. But then do you put that as consideration of based on the announcement and how the market perceives it is really the determinant less in the financials than anything. It's more of a what's the market perception going to be?

Yeah, it's a relation there is that.

Part of the pitch? Do you pitch it up to the board and say hey we know the market's going to love when we announce this because the story makes a lot of sense as opposed to the financial details?

I would say yes. Yeah. So it's always my driving factor. But there is no disconnect between this and how a customer sees the completion of our portfolio. If there would be a disconnect, then the one or the other would not happen. So this needs to be call it like almost be married.

Do you have to pitch to the board a lot when you do deals?

No, I have to pitch to the CEO and CFO and I'm directly reporting it to a SLT member, the senior Vice president for strategy and technology and he is pitching to the board.

When you pitch the executive team, teach me like what's your formula? How do you get good at pitching to the executive team?

Yeah, okay. This goes back that I'm a technical guy. I'm an engineer. So I'm always driven. A bit like completion of the solution portfolio and fit to our customer needs. This is my main driver. Of course, of course I have the financial model according to before mentioned targets.

But the story is the engineer. You're sticking true to the problem solution.

Basically this is what finally delivers you the inflow because there is a customer and only the customer gives you finally money as a company.

So this all goes back to how this is going to.

Yeah.

Benefit the customer. What's the hardest part of Programmatic M and A?

Discipline and to work consistent and to follow things. So email is coming in. Link it to the project, bring it in there. Things like this.

Yeah.

And have an information flow as good and as complete as possible, but also as secure as possible. I was before mentioning a lot of discussions inside the company and you have of course also to take care that it's of course non disclosed information and it's critical. So maybe this is the mix of being as open as possible discuss all our targets but keeping it as also in a circle that it's non disclosed.

This year's hot topics all about AI. Couple of quick questions. Just trying to get your perception since it came up earlier. How excited are you about using AI? How do you envision it being applied to M and A?

Let's say I give it a eight plus quite excited and I was mentioning during this podcast interview a bit already let's say options which I dream of supporting me we do not use this yet but I was talking about a white paper generator or something where out out of all of these due diligence materials I can generate my white paper and and have only to add the financial part. So in Documentation, Also doing due diligence, having these groups giving their reports.

I think you're hitting it on. I think the strongest use case is taking unstructured data and structuring it.

It's perfect word.

So much of due diligence. The team will appreciate it. Yeah, that's a great starting place, that's for sure.

Yeah, yeah. Cannot close a deal, cannot sign an spa. For me, this will remain from my point of view, forever in very individual negotiations and legal topics. So I see their limitations. We do not, by the way, use AI a lot so far, but we have also identified a project to investigate how and what documentation we need. In addition, what rules, things like this.

Yeah, I know our team's working with your team, so we'll have some fun, exciting stuff. Do you ever use. Do you ever log into deal room?

I have a login into Droom and I use it and I have a good trainer. I'm looking to the left as he's sitting on the table here.

They should have a dashboard for you that just greens and reds. So you know. Yeah, we have a number of even VPs, heads of corp dev I've had in the podcast and so is the running joke of I just want to see my report and know and then.

It'S good enough what's yellow and what's.

Red and that's it.

So what I actually like is that it's quite intuitive. I'm able to step in and find what I'm looking for and the reporting structure. Even there I was able, let's say, without any additional help. At 10 o' clock in the evening, it was on the other side of the ocean with my manager was 3 o' clock in the afternoon to prepare for him something where I need to pull. I needed to pull a report out of. This is good. Yeah. The easier you make these things, the better it is. And of course the dashboard would be always good, but I would not be able to tell you right now what I would like to have in this dashboard. This is really from my point of view already well managed.

I can tell you the team, your team has been fantastic to work with. Anytime we need feedback, they come prepared for each own list of things that they would like to see. And it's been extremely helpful for us.

That's good to hear. That's good to hear. I mentioned that tool manager and as an important role also in programmatic M and A. And this is, let's say part of this topic is not a sole role. It's a role which you are taking care of. But this is an important part.

I know where it comes from. It's not them, it's you. It's you buy Fostering the culture of continuous improving the tools I see why every single person on your team has a list of feedback to provide.

Thank you very much for this.

Can you contrast what M and A was like before you use deal room versus after?

Yeah, I touched base on these changes. Nothing as consistent as the change people are changing. And due to this before deal room handover was almost impossible and follow up by others was almost not manageable.

Improving handoffs and follow ups important in MIA absolute.

And then from time to time you need let's say a year, 18 months, 24 months later again access to what you did at that time. And this was in the past. So there when I started four years back, I found a lot in traditional files in a cabinet, handwritten notes and things like this.

What were the key things that made this transformation in your M and A process successful? If you were to summarize that, we hit on three big themes in this conversation. Like we really talked about having strategy defined in such a way that is so clear that any opportunity you look at, everybody knows where it fits into that strategy. We talked about tools and that keep improving that workflow so it keeps getting better and better. And then we talked about the initiative of really connecting the lifecycle. Having your strategy run through your diligence process and connect it to your integration process and really get that continuous flow there which lends to those hands off handoffs and follow ups. But when implementing this, because it's really formalizing a program, a lot of companies they'll do M and A to the point that hey, this is going to be core to our growth and that we want to formalize this. What were the key things that made that successful for you to do it in your company?

Yeah, this is maybe not that easy to answer. So let me make it and give you one different aspect a bit to all of this. Key performance indicators and financial results and positive things which we have as a story right now, but are also depending on the current global economical situation. How this is developing macroeconomic things and you know, crazy years are behind and maybe ahead of us where every quarter things are changing dramatically. My observation is a bit also the motivation of the team you are working with. This is maybe a completely different aspect, but the better the tool, the better information. Change is, the better communication and the more open it is, the more motivated are your team with you and have fun while they're doing things which are hard work really to deliver. But this is an important aspect also we were talking about customer satisfaction, voice of customer. And it is also the employee engagement and the employee engagement focus in these activities. And there we see a significant improvement.

But tell me, what do you do though? You know, is it, hey, I'm going to send you guys some bottle of wine every so often and something like that or is there anything that.

No additional motivation? There is, of course we have a rewarding program implemented where you can give points to people who are doing good things. But this is not the motivation. The motivation is how things are flowing, how input is turning into output and with, let's say how many fun you have in between in delivering this.

Almost like how you engage them or get them involved.

Soft factors. It's correct. Yeah.

Okay. Yeah.

Let's say the roots are really to my analysis that more and more people are understanding their high level strategy. Communication is an important part for that. And with that the motivation is immediately increasing. And there we made inside belt and significant progress. Great place to work measurement we do regularly. And it is not the measurement. And the result only is the feeling. You feel it. If you walk through our offices, through our factories, facilities, you feel the motivation.

I thought that was cool when you showed me the area where they have a program that they bring fresh recruits right out of undergrad and they're literally getting them directly experienced with real world work, not just running around fetching coffee. That sort of speaks of the company culture right then and there of just giving people opportunity to go create value and learn the skills.

And this in a 120 years old company. 122 Belgium was founded in 1902. We have talked today about the 100 years of the brand Hirschmann. We are celebrating this year and it's not a pure startup, but you feel like right now with our solutions approach like you being a startup and have this motivation and in a established company, this is not so easy to, let's say to leverage this.

I gotta ask you, what's the craziest thing you've seen in M and A?

The craziest thing in M and A is if you buy something and have to sell it and they are selling it a year later to half of the price they bought. And things like this, a bit like.

Misinvestments and buy low, sell high. You buy high and sell low. Yeah, good way to do business.

But other than that I see right now a lot of activities is not, maybe not completely earning season. This day, but I see a lot focus on just purely driven organic growth and I think this is also not good. I would not say it's the craziest thing. The greatest thing is when you buy something with this motivation and sell it a year later. This is a bit what I saw and observed.

Yeah, I'll take it. This has been a fun conversation. I learned a lot. You've helped me become a better M and A scientist was my pleasure.

I learned a lot from you and I'm looking forward to a joint collaboration going on.

Oh no, that's been an awesome privilege opportunity and to come meet you actually in Germany and get the factory tour. This is nothing more I can ask for. Wolfgang, thank you so much for your time. Those of you still with us, hang tight. We got a little extra bonus interview here. Thanks for taking the time. Oleg Kottridge, Business Development Analyst at Belden I want to talk to you a little bit more about the nuts and bolts of being hands on with the process improvement initiatives. But maybe you can kick things off a little bit about your background and current role at Belden.

So I joined Belden around three years ago through our postgraduate program called Launch. We will focus on hiring people straight out of university, right out of master's program, giving them opportunity to develop themselves through a three year program where every year you rotate into a different role. I'm coming from finance background in finance and I did a bit of ops controlling in my first year, did commercial finance in my second year and then in my third year. I joined our M and A team almost a year ago I think to the date actually I was brought to the team actually to integrate Deal Room into Belden and now I'm learning, supporting all processes from cultivation to due diligence to integration, whatever you can imagine. What Wolfgang also mentioned is that we'll try to accelerate our programmatic M and A and we needed to bring some structure into our processes to make sure that we have all documentation ready, make sure we have one single source of truth. And thirdly, that collaboration can be done seamlessly and easily between different departments.

When I think of improving an M and A process, I always think of collaboration. Can you tell me about your approach when it comes to collaboration? And I'm thinking you have internal team leadership, your different functions, departments and external teams. How do you manage all that?

So currently we are managing it through the emails or team calls or face to face meetings, but there's a lot of communication that's done on a day to day or weekly basis. If we are at the early stages of the M and A processes. We are involving of course the core M and A team. We are of course talking to our product managers, our R and D people, our technology people, to make sure that we completely understand the strategic fit of the company that we're planning to acquire. It can fit into our solution selling strategy. Then if we move to due diligence, then of course there's all the departments involved and their communication is key to ensuring that due diligence is done in a fast manner, accurately and make sure to flag all the risks and to identify of course synergies. And with integration, I think the communication continues to be the key again to ensure the integration of the company is done accurately as well as and all the value is realized.

Role of Technology M and A How do tools like Deal Room and pitchbook enhance your M and A strategy?

At Belden, those tools bring structure to our processes and clear overview responsibilities and roles. So that's where Deal Room comes in. In terms of PitchBook, this is just an easy way to access information, just saves time. Rather than going to the or to the Internet to look for things by yourself, googling it, looking different websites, it just consolidates information in one place and basically spits it out for us to use.

You mentioned like integrating M and A tools. Talk to me about your experience. What were the challenges when you're integrating MNA tools? How'd you overcome them?

I must say I'm really grateful that I had support our leadership because I know that in some companies the fear of change is quite big. I feel like in Belden that's not the case. So I had full support first of all from my management, from also the team around me, but also in other departments. When you show people the value of this new tool that it can bring and that it can ease their life and you show that of course if you put some time in training, if you put some time in helping you to develop it within your team, it will save you time, bring back some resources, save money. The key here is to show people that this tool will not be a burden, but rather than it will help them to achieve their goals.

So it sounds like you're more responsible for the enablement of the tool, probably more hands on day to day than most of the other folks.

I was brought to the team to integrate it. I'm working also with the dream team to make sure that the product is running smoothly, providing feedback. It's been really fun.

Okay, so this is good. That's why I want to End the conversation. A lot of the folks on the top of the chain, you know, it's sort of. There's the tactical components of an M and A process and it sounds like you're definitely more in the weeds. But even when you're implementing or when we talked about continuous improvement of the tool set, you're more hands on to that. And the one key thing you mentioned was how you enable it was really showing the value add. Can you give me a specific example of something that you did and how people actually adopted it? I feel like this is like the biggest thing that stunts a lot of companies and why 80% of this market is still using Excel for like literally everything.

Yeah, using Excel nowadays to track everything. Just criminal.

That's a good way. That's. We shouldn't pass a law that makes it criminal. I like that idea.

Besides showing the value of the tool to M and A team, I think that's pretty easy and there is no conflict there because it literally brings back the time that people invest in. I think the tool was shown to external people outside of M and A team during due diligence of one of our projects. And there, there was a bit of a resistance because people are used to tracking it on Excel and emails flying around over time. People realized that using these productivity tools will save them time. And the way I facilitated that, I kept reminding them to use it. I didn't annoy them with that. I made sure that it's all polite and very fluid. I'm there to support them and any questions at any time that they need.

So let me ask you, how do you use Deal Room?

The M and A team, we use it to track the pipeline, our inflow. We use it for, of course, due diligence and we use it for integration, tracking. Additionally, we use it for reporting processes through the dashboard capability, where we build different dashboards for different users. Just copy pasting it into PowerPoint and presenting it to various stakeholders. It's kind of from start to finish. That's what we're aiming for.

That's what it sounds like. Pipeline, the due diligence process integration and then reporting out.

Exactly.

Which would be all those areas? Pipeline, diligence, integration.

Precisely. Yeah.

When you look at enabling this technology, do you have a specific example of how you've been able to get folks to actually adopt?

I think the most important part of my effort was to make sure that people use this tool during due diligence. That's what we use this tool for outside of M and A. Outside of Pipeline. Tracking and to make sure that people use this tool and make sure that there is the least resistance possible. I make sure that they know that there is support available to them at all the times coming from me and that I keep training new people. I keep repeating the same things all over again with patients and without being annoyed at them. I think it's very important to show that you're there to support and support is given without even sometimes being asked for. If I see people struggling, I'm on a call, helping them, supporting them, making sure that there is no issues.

So it sounds like there's enablement internal teams which you got more time, you can get the buy in. But then when you got enablement with an external team, I. E. The counterparty, you got a tighter bandwidth and it sounds like that's an area where you definitely got to be wide awake on.

Of course there's time investment from my side, but for the next due diligences, for the next projects, people start to use it more and more. And when people educate themselves, they start educating their team members also providing support and relief to me. So we just need to train the organization to use it and after that's done, then it's done.

Like why the tool set, why deal room? How'd that fit into the scheme of things?

Yeah, so before let's say I joined the team, what also Wolfgang mentioned before is the whole process was based on putting stuff on paper, shooting emails, having files in different locations, different laptops from different people. Very unstratezed, inefficient and time consuming. I have more of an optimization mind for code like that. So if I see a process, I always think how to automate it to make sure that people are focusing on, say more important things. They're just doing routine aspects of their jobs, they're just providing relief for that. When I see a process in our team which is not somebody that's inefficient, try to automate it or facilitate it and how I do that, I do it through different tools. And droom is one of the tools.

Driving efficiency, it sounds like was a big why.

Yep, pretty much.

Is there any approaches you found helpful to support integrating newly acquired companies?

The key, or at least what I've seen, I think the most important part of any kind of process that would be due diligence integration process. It's ensuring that collaboration between different people is extremely easy. And to do that and to ensure that you need to make sure that people understand all the processes, all the aspects of other people's Jobs and what other people do. So people know who to come for any topic that they have. So for instance, if a person in HR has a question regarding contract from a legal standpoint, they will know exactly who to contact in a legal department. That's one of the examples. So standardizing processes through the company and ensuring that people know what's happening, who to reach out to and what the process is, I think that's the key in any of the stages of either M and A or I think just.

In general it ties back to enablement. You can architect the process for days, but it's more about enablement. Having people buy in, understand how it's going to work, who the other people involved are and give them a little bit of autonomy for them to, yeah. Figure things out on their own.

Also documenting and ensuring that there's a place where people can just come and either have a training or just have a learning.

Do you do that? Do you have to hold your own sessions in house of hey, here's how we design the process, here's the tools we standardize on. This is how you're going to use them. Are you pretty involved with that?

So we do those trainings when we pull people into, for example, integration of due diligence. If we separate M and A from all the other build on activities and then if a person never done that before or if there's a department, a group of people never done before, then yeah, we do the trainings or I do the deal room trainings for any employees that need support there. When we have a new process, same thing.

But really the kickoff meetings.

Exactly, exactly. That's a good way.

What are some of the unique challenges of conducting cross border transactions?

The time zone is definitely, I know it's an obvious one, but it's a challenging one. Especially if we're based in Germany or in Netherlands and then we are talking with someone somewhere in California, like in a Pacific time zone, that's a really big time difference. And especially at the end of the, closer to the end of the deal we have, you need to have constant communication to ensure everything's aligned. There's deadlines coming up. The time zone, the time difference just brings more hours outside of your normal working hours. That's one of the aspects. And of course then the second one is culture. It could be from either even across border, even between two different European countries. There's 27 countries in Europe and every country has a different culture. And you need to consider that.

I'm learning there's a lot of layers of culture. Because even in America you talk about culture and it's like culture between different companies, but then you talk about culture between different countries, layers of culture and.

Even culture between different regions in one country.

Yes. What motivates you to continue growing in the field of M and A? How do you approach learning from diverse teams?

I absolutely loved my last year at M and A. I've learned the most about all of the things regarding to different departments within Belden and just in general I learned stuff about law that I never learned before. I know stuff about now operations, our supply chain, commercial side of things. Of course, coming from finance and accounting, that aspect was known to me. But now I can see how those processes and aspects are taken into account from a global perspective and I am extremely excited to learn more and there's so much more to learn for me.

What's the goal? Where are you going to end up still considering that.

To be honest, I don't have a certain position in mind. I would just love to develop more lead people and kind of develop my further. I know it's a very vague answer, but I'm still early in my career.

And I'm still developing up and comers. I'm just trying to read you out.

Yeah, absolutely.

Yeah.

Any other like takeaways or things you'd want to share with other practitioners if.

You'Re struggling with running again, due diligence, integration or any other kind of processes? Just make sure that it's standardized, make sure it's documented somewhere and make sure that as streamlined as possible and people are educated. I think that's one of the biggest takeaways that I learned and that I would like to pass on to others.

I guess that's like the crux of making M and A into a program which has been the theme of this podcast. It sounds like documentation process is a big part of it, but then enablement was one thing we actually talked about was like how do you get people to actually adopt, educate them about it and then I guess be dynamic in a way. They are experienced if they're new to it. So you can put that emphasis on training them the new things they need to know.

Yeah.

During the interview with Morgan Shank you mentioned or you asked how does leadership motivate the team to go forward to move and execute these deals in a fast environment and fast paced rhythm? At least for me, and I think that's what I noticed, is that the appreciation of your work, at least for me, is the biggest interesting motivation. Appreciating people's extra hours or extra commitment. I think that's the keys at least that I take away with for my future leadership positions.

Feeling appreciated?

Exactly.

Yeah.

I like that you got to really appreciate your team members and I think that's the thing that you found value that keeps you motivated as part of this team. Was there anything else in that conversation that you may have answered different or.

Just wanted to say that regarding AI artificial intelligence. So during Wolfgang's Shank's interview said he was at 8 when he marked how excited he was. Personally I think I'm a 10. The adoption of artificial intelligence would be the key to progress further and to stand out from the company's organizations that do not use AI capabilities for their processes that could be either internal or external. So looking at so rapid development in this field and thinking how to use this amazing technology within M and A extremely excited for the next maybe even two months. Nowadays you don't know what's going to happen. GPT 4.0 just dropped and it's top ranking.

I agree. I'm optimistic. I know you're testing some of our new beta functionality, so I'm excited to see that progress as we continue working.

With your team can develop in that regard.

Yeah, we talked a little bit about the templates or as Wolfgang referenced building, automating, building out the white papers. Are you, are there other views or ideas that you have of how AI could impact M and A at least.

At the current state of AI or gen AI development? First of all, of course drafting different documents or drafting due diligence reports that would be extremely useful and extremely time saving for the team. I also mentioned a bit about redundancy of due diligence requests. Sometimes sell side would be a bit overwhelmed with the requests from the team and the teams of different work streams don't really see each other's requests. Sometimes because of close permissions or just because of such a big workload that the team cannot really check what other teams submitted. I think is pretty fair. The AI would help a lot here as well to make sure that the request either has been maybe already answered or has already been submitted.

So you got some real process assistance.

Yeah, I think that would be extremely helpful.

I like what you're thinking.

Structuring integration process based on previous integrations.

Yeah.

But to be honest, again this is the current capability. I don't know what's going to be in one year which will be something out of the box that we can't think of now.

It's moving fast. I agree with that, it's going to be exciting as well to see how things evolve. What's the craziest thing you've seen in M and A?

In my limited experience, I mean, not the craziest thing out of M and A, but the expectation that I had coming in of how complicated a deal could be, how many moving parts there are in one transaction. Because you read those news articles. Oh, Apple bought this, Microsoft bought that. It's okay, thanks for announcing it. Your store goes up or down depending on what people think. But then you go behind the scenes and it's just so many people, so many moving parts, so many things to consider in such a short amount of time. I think that's left impression on me.

M and A touches everything.

Exactly.

Oleg, thanks for taking the time to have this conversation.

Absolutely. Thank you.

I thought we'd wrap things up, but I got to hijack you for a little bit more time. There you are folks. You got both sides of the deal team. I don't know both sides of the deal team, but you got top to bottom. You got your head of Corporate development to the new up and comer on the team. This has been a fun conversation. Again, thank you Oleg. You've contributed just as well as Wolfgang, helping me become a better M and A scientist. If you listen to these podcasts, I love feedback. Find me on LinkedIn. Love to hear from you, get feedback, topic ideas and just want to keep improving this content. Otherwise, till next time, here's to the deal. Thank you for taking the time to explore the world of M and A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M and A function or optimizing one that you already have, we're here to help. And if we can't help you, we probably know someone that can. You can reach out to me by email Kisan K I S o n a science.com or you can text me directly at 312-857-3711. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com here's to the deal. Views and opinions expressed on MNA Science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.