The People You Lose in M&A: Key Talent Retention Before Close

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All right, back to the episode. I'm Kison Patel and you're listening to M&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&A deals.

Hello, M&A scientists. Welcome to the M&A Science Podcast. This show exists for one reason: to learn from the best practitioners actually doing M&A, not the consultants and the academics talking about it. We track down the top operators in the world, get them on the mic, and pull out what's really working. Then we turn what we learned into frameworks, playbooks, and the only certifications built on real practitioner experience, not recycled textbook theory. That's the whole engine behind Buyer-Led M&A, the operating standard for buy-side deals where the buyer drives strategy alignment and value creation from day one, instead of letting bankers and sellers run the process. Today's conversation is a live example of what that looks like in practice. I'm joined by Hasib Jawad, VP and Head of Corporate Development at Commvault, publicly traded on the NASDAQ exchange under CVLT. Commvault is a data protection and cyber resilience company. Hasib runs a lean corp dev function that owns the full deal lifecycle, strategy, sourcing, diligence, negotiation, and post-merger integration. He's also served as Central Integration Management Office leader which puts him in the seat where culture either holds together or falls apart. Today we're talking about why key talent leaves after close, how to build retention before you need it, and what end-to-end accountability actually looks like when one small deal team owns the whole deal.

Asib, how you doing?

Good, thank you. Thanks for inviting me here.

Thank you for joining us here live at Dealroom headquarters in Boston.

Yeah, I'm excited.

Can we kick off a little bit about your background?

I think I've had a different background than anyone in the corporate development space. I didn't come from a banking background or a consulting one. I actually started as an engineer and I did electrical engineer, specialized in telecommunication. My first job was actually in the customer support organization, so I worked as a level 2 support engineer. Then I decided to actually change my career and enter into the network engineering side. I did my Cisco certification. And worked in another US-based company for a couple of years. I remember one conversation that I would always have, which is when I would see emails congratulating sales organization on various commissions that they have earned or any other team in the organization getting all the praise. And I was like, everything is being done by the engineering organization. What is the other— what are the other functions doing? I didn't have the appreciation and the perspective of how this whole organization works. What are the different pieces of the machine that make it successful? That was the point when I decided that I'll actually expand my horizon. I look at various other opportunities and that's when I decided to do an MBA. So I came to Boston University for my MBA, did that for a couple of years. And right after graduating, I joined a company called Avaya. In that organization, I had a leadership development program. So we had 3 rotations. My first rotation was actually doing project management for engineering. So I could make a connection with my engineering background and actually talk to engineers and do project management for them. Then my second rotation was actually doing product management for the services organization. Not a very typical product management job because you would expect the product managers to be working on product, but I was actually developing and working with others on the services component of the business. And that's when I joined another company in downtown Boston called Carbonite. It was a public company at that time, and I joined as a project manager in M&A. I did not have any expertise or knowledge about M&A at that time., but I knew project management. I had worked with cross-functional teams. So again, my project management background actually helped in landing that role. And I did M&A for over 6 years there in various roles. We used to do like 2 or 3 acquisitions a year, sometimes even more. And I still remember there was time where we would actually do coincidentally an acquisition every Christmas break. And I used to joke that we'll have to probably build a fortress around us so that the other teams actually stop throwing stones at us that we are ruining their holidays. But yeah, we did 3 or 4 acquisitions a year. And back in 2020, we actually got acquired by a Canadian company called OpenText. I was able to actually see both the acquisition side of it and also how you actually get acquired.

Wow.

Fast forward, I realized that I had done acquisition for a long time now, and I worked with a lot of teams, and it's a breadth of experience that I get, and I wanted to get a depth of experience. I wanted to actually get organized get involved in a role that's either on the sales side or the product management side. So I joined another company called Rocket Software. It's a Waltham, Massachusetts-based company, and I actually did product management for them. They were establishing a product management organization. So I was one of the few early product managers that were hired. I did that for a few years and I was able to actually see the business side of acquisition. We were actually responsible for integrating the companies from the product engineering side. So I did that, then got involved on the product operations, and then my last role at Rocket was back in the integration space. So I did that for a few years and that's when I got opportunity to work at Commvault. So yeah, engineering, product management, services organization, and M&A.

How many deals have you worked on?

Over 20.

Over 20. So I have 3 kids and they're all going to be going, making decisions about college. And I'm telling all of them, especially with emerging AI, they should all become engineers. Pick your flavor. Become an engineer. Tell me why I'm right or wrong about that.

Engineering. The lessons that I learned from my engineering background are still useful here. When I was in product management or when I was in M&A, or I am still in M&A, there's a lot of interaction on how products are developed, how engineering makes the organization successful, whether you make it a full-time career or you work in engineering for a bit and then move into another. Function, that's an expertise that is always helpful, that's always useful. You get an analytical mindset, you get the perspective on how the products that your company is working on is being developed in the first place. There's pros and cons of both, and I actually really appreciate that I was able to actually get that early in my career that I could use in my M&A career.

Now it's the problem-solving thinking, the ability to zoom in, zoom out. I was like, It's hard to learn that as an adult.

Yeah, exactly.

So as an M&A leader running corporate development, how do you decide what deals to go after?

The strongest partnership that you can develop with the products and engineering organization. So going back to your previous question, how my engineering background or product background has helped. We are a strategic technology company. We are not like a typical banker or a consulting firm who is going to bring acquisitions from different perspectives. What we want to do is the strategic story that we can tell to our customers. So the first thing, the most important thing is developing those relationships the product and engineering organization, understanding what their product roadmap is, understanding where the gaps are, understanding what the strategic rationale would be, and be part of their roadmap conversations by versus build versus partner. So that's one. The second is the market landscape, having a good perspective on what those different companies are in your space or in strategic adjacencies that you are interested in looking from an acquisition perspective or even partnership or investment perspective. So building a view on the industry or the market is, I would say, the second most important thing. Third is, of course, based on that is building the target pipeline, how you are thinking about various companies that align with you and having a perspective from different angles— large, medium, small size target companies or in various M&A strategic areas that could be important to your organization. So building that target pipeline with different kind of filters and with different kind of perspective or angles is another important one. And then fourth, I think, and it's not in any sequence, but the fourth important one is relationship across the organization. Product, I started with that, but sales and working with your finance organization and all the executives and the people who are going to be responsible for integrating the company, that's a very important thing to have. You need to have the pulse of where the organization is going, what customers are thinking of, what technologies are relevant, and especially now with AI, The technology is changing so much, so how you stay intact with that through your relationships, through the customer conversations, those are all very important. Those are the 4 criteria: products and engineering, conversations, the industry perspective, building up the target pipeline, and then of course the other relationships in the organization to make it successful.

So you got the partner part, partnering with the engineers, really getting aligned on them. This helps you build out your view and sort of know that there's consensus on this view in the industry. And then when you build your pipeline, It sounds like there's fit criteria, but it's not like one dimension. You can have essentially different dimensions of fit criteria depending on probably what the strategy— maybe you can give me a little more on that. And then how this actually ties across the organization because everybody essentially needs to get aligned. I'm curious on the two parts of fit criteria. What does that look like? I want to understand how you engineer that part because I feel like this is the thing that's easier to say than do. People are like, oh, you got to have a clear strategy and build your criteria so you can make quick go/no-go decisions on deals versus chasing the shiny objects around. Maybe we can start there. Then I got a question in terms of like, how do you get the M&A culture in your organization between push versus pull?

Yeah, of course. Again, going back to the same 4 criteria, this topic that I was just discussing, the criteria depends on 3 things: the technology story, the financial story, and the culture that we'll be able to build with the organization. While some could be quantitative to analyze, there's a lot of qualitative analysis to be done here as well. Technology, of course, with the products and engineering organization sitting with them, with sales organization sitting with them and understanding where the organization is growing. Financial in terms of what we can afford, what the multiples are we are looking for, what the valuation criteria would be, what's the P&L going to look like. We are a public traded company. The guidance that we have given— that's very important for us to make sure that we acquire a company that either fits into that criteria or we explore from various financial angles. And then, of course, like the last thing that I mentioned, which is the culture. How is that organization going to be culturally aligned with us? That's not something that you can look from outside, but I think you can get some information, some data, some conversations that you can have about the employees, about the reputation of the organization. And again, depending on the size, if it's a big organization, would it be able to fit in our organization or not? Or if it's a small one, how would we be able to absorb all of those things? Those are the three things that I would say— the technology, financial, and the cultural story that we can align with our organization.

Let's break these down. So the tech one, you obviously have conversations, product engineers, you're really shaping the strategy. I'm wondering, like, if you look and when you map out your market, you've identified technology that's very close to the core. Technology that's overlapping with existing products, adjacencies. Like, how do you think through that and prioritize between those areas and getting a sense of like, where's the prioritization land between those type of deals?

Yeah, it starts again with the buy versus build versus partner conversations because those all happen in parallel while we are building something. The buying conversation is happening in parallel and perhaps the partnership team is also working in parallel on looking at those criteria too. So first, it cannot be one or the other. It's all happening in parallel to each other. The second thing I would say is what you just mentioned, which is there are some opportunities which are in the same space. Maybe it's a consolidation, maybe it's a small technology gap that we need to fill in through an acquisition. How we look within our space and what answer this company or a set of companies that we are looking at provides to us. And then of course, the third thing is the strategic adjacencies, as you mentioned. One thing I'm very careful about is Commvault being a data protection company, and in my past, like all the companies that we have worked with, What is the strategic adjacency that is going to be closest to us so that when we are telling the story, it's not about we do this and then something— some other company is doing something totally different and there's a gap in the middle. So how the story aligns very well, very smoothly is a connection that when you go to the market and tell that, yeah, we have acquired this company for this and this reason, it runs smooth. It's a story that clicks with the customers. It's a story that we can actually tell our investors, our shareholders, and of course to the rest of the market. So getting that perspective is important. Sometimes just testing that theory with various folks is important. We have done that with analysts, we have done that with bankers, we have done that with our customers without even going into the exact detail, but just testing out the theory, how it would be perceived, getting that perspective on what the strategic story would be. And the strategic rationale around it is very important. So whether you are in this space or looking at something adjacent, the story needs to run very smoothly from a technology perspective.

What are your favorite type of deals between consolidation, accelerating roadmap, and adjacencies?

Adjacencies, because it gives you an opportunity to look into expanding TAM and look at other set of customers and also increase the potential for cross-sell opportunities. So customers get a solution from a vendor that provides multiple products in the space.

Does the story, like, land different? There's one thing telling the market the story, but then convincing a founder to get this deal actionable. Does the story change much between those things? It's like, hey, we do consolidation, here's how we're going to secure some cost synergies, essentially, versus we're going to accelerate this roadmap that should help us together get a nice product out to market faster, versus, hey, we can, like you described, on adjacency, we get to grow much bigger together, cross-sell, et cetera.

In buyer-led M&A, as you would appreciate this comment, it needs to start with selling your story to the founders, to the other organizations. So it cannot start with the cost synergy kind of conversation. It's more like where can you find a common ground for our customers who would benefit from having this, these solutions from both the organizations in that we go with the thesis. But this needs to be a conversation with the founder, with the company, getting That story evolved over time is very important. So you go with a thesis, you hear actually their perspective from the other side, and then you build a story together. It's the two teams coming together to have a comprehensive story that I think is going to be very important there.

Do you convince people to sell their business? We do.

Yeah.

There have been many conversations where I don't think that the founders knew or appreciated why there's an outreach coming out of— from a Kovda person. Sometimes we have actually had some cold calls or cold reach out through LinkedIn. And I always say that you need to be very respectful of those conversations. I cannot start the conversation with my LinkedIn message and say, okay, I'm interested in acquiring your company. It needs to be win for both and it needs to be a partnership kind of a message. Let's talk on some strategic rationale. And then when you connect on the phone, you talk about what you are doing, how you have been thinking about your thesis, your product roadmap, and hearing about the other. And sometimes M&A conversation doesn't even come in the first call. There are set of follow-up conversations. You bring in product folks, you bring in other people from the organization, you continue to tell the story, and then you expand on your conversation. I've seen many times that there's something that clicks instantly on both sides, that, yeah, this makes sense. The story that you are telling and the path that we are actually moving with, it aligns really well. So why don't we do something together? So it has expanded from a partnership conversation to an investment conversation to an M&A conversation. Sometimes it takes longer, sometimes it's quicker. But yeah, we have come many times to actually talk to founders and convince them on the story.

You get this aha moment when you talk to them and they start really seeing like there is a better together vision of us coming together. Maybe you kind of— the outreach could be a little soft. Hey, let's talk about potential partnership or just explore some opportunity.

Like, what is your framing?

What is your first message sound like?

It is more about what Commvault does. Who am I? Why am I reaching out? And I want to discuss the strategic better together story and more from a partnership perspective.

Maybe again, that's a long email we described. That's a lot. Do you send long emails like that?

No, no, I don't. It's more like starting with a brief introduction about both the company as well as myself and yeah, talking about what we could discuss on phone and find an opportunity to connect.

When people get excited, they're like, oh, Corpto is reaching out. They might got a big check to write us.

Sometimes they do. Sometimes they're like, yeah, why is this person reaching out?

That's funny.

Yeah.

Do you ever get inbound where people reach out to you to make an introduction to their company and get on your radar?

Many times.

Have you ever gotten a deal that way?

We have, yeah. And mostly it's either through the common connections or bankers or through consultants.

Never founders reaching out directly or CEOs.

Mostly if there's a common connection that someone has said, okay, Commvault does this or this company does this, and there is a strategic discussion that you can have together.

Yeah, that probably lands better.

Yeah.

So we have the tech, we have these different scenarios. You do the buy-build analysis, you start thinking through what type of strategy we're looking at. And then the finance part, when you look at an organization like yours, what are the quick parameters? Is it obviously this has to be a certain size of a deal for us to be worth doing? Or I guess if it's like bridging a roadmap gap, it doesn't matter. You're just going to accelerate product to market. Are there certain finite things when it comes to the finances? Is there valuation expectation? Is there maybe what life stage they're at the company? I guess that would correlate with the type of deal you're doing.

It starts with the financial profile of the combined organization. And again, it depends on the size of the company that we are looking at as well. If it's a technology tuck-in, then It's going to be very small, with small set of customers and revenue associated with it. And of course the cost profile, but it could be medium or large size acquisitions as well, and it could be transformative in nature. So how does the P&L look like of a combined organization and how would the investor or the shareholder reaction would be? I've worked in both private companies as well as the public companies, and both have slightly different criteria when they're thinking from a financial profile perspective. The second thing which you mentioned is from a valuation side. What the multiples are. We have certain multiples being a public company. Again, if you are a private company, you have certain valuation expectation of your own organization. So the company that you are looking at, is it at the same multiple, revenue multiple or EBITDA multiple? Is it lower than that? Is it higher than that? So that's the second thing. And then the third thing is looking at the industry. There are different companies with different multiple expectations or different industries have different multiple expectations. Very recently, AI, I've talked to many, many CEOs. And there have been some companies which have an idea on a piece of paper but have very high valuation expectations. Some will have some revenue and some customers, they will have even higher expectation from a valuation perspective. So what the industry valuations are is also another criteria to look at, whether it's in AI space or cybersecurity. So comparing with other companies who have actually traded and how it's perceived in the industry, those are the three things: the financial profile, the valuation, how we would look at And then the third thing is the valuation from an industry perspective.

So I should slap AI label on my company and trade higher.

I have seen many such companies with just AI washing and have, yeah, very high valuation expectations.

Is that changing?

Because I feel like it's so easy to build a wrapper around any LLM and say, hey, we're an AI company. Is that changing? Because I'm wondering, is there some metrics underpinning it that still justify it? It's like one thing to say you're an AI company, but And on venture side, they expect some extremely high year-over-year growth if you're a performing AI company.

Yeah, the most important thing that's happening is there are so many AI opportunities that exist and everyone wants to tell that story that we have acquired an AI company or we have built this AI technology within the organization. Some of course get a very positive reaction, some don't, but there have been many such cases where I've seen like it's an AI wrapper or it's an AI washing that has happened with the team and they have pivoted. They have totally pivoted from what they were doing before to now building on AI side and then again, as a result, have expectations that are very high. But like you mentioned, there are still a limited set of buyers and there are so many AI companies. I have also been in conversations where the expectation was very high 6 months earlier, but they are probably reaching out again to think differently. Their valuation expectations have come down, or maybe they have actually pivoted further. They have maybe expanded on their product vision. So there have been many such cases where organizations are trying to find their place. And have a story that they can tell in a combined organization.

Culture. Culture is one I think we want to unpack because I know you mentioned this is a big thing for you and it's been a big part of what makes or breaks deals.

And I want to start with my—

and this isn't a philosophy— observation that I've done a bunch of these interviews and I would say I'm convinced there's like 3 big schools of culture thinking. Classic old school corporate development, which is there are 2 unique cultures. We're going to put the businesses together and they're going to create their own unique culture. That's it. We're going to get the deal done regardless. The numbers make sense. Classic. Progressive is we really want to understand culture so we can tailor our integration approach. We understand that even within an organization, different functions have different cultures within the company, and we want to really have that understanding so we can tailor our integration approach. Then there's even— this goes beyond progressive. This is Proactive, which is we have this culture that we believe in so much that any company we buy, we're going to have them conform to our culture. We're going to communicate that ahead of time, that one of our biggest strengths is the way our culture operates, and this is going to be a big part of you joining our organization. We're going to deploy a lot of change management leadership to help your organization become part of how our company operates culturally. I'm sort of convinced there's those three schools of thought when it comes to culture. I want to hear from you.

What's your experience and view?

I believe culture is a word that everyone is trying to understand how to actually define. We have struggled as well, and we still do. The thing is, culture is not about service, is not about how HR policies work. It's more about how decisions are made, and especially under pressure. And what we have tried to do is— so Corporate Development at Commvault is actually part of an organization that's called Corporate Trust. We basically have corporate development, business development, security, legal compliance, like all those things. So our organization is basically called Trust. So trust is very important to me. And I actually came up with an acronym for trust. It starts with transparency, that you need to be very transparent from your first conversation when you are talking to the founder, what your intentions are, what you want to do, what the strategic story would— you would tell. And when you are communicating to the rest of the employees throughout this journey, how you're building that transparency. What's the honesty? What's the honest story that you're telling everyone involved? R for relationships. The relationship that you're building throughout this journey. Again, sometimes it starts with founders because those are the folks that you are actually involved with right from the beginning. But over the period of time while you are doing diligence, there are more people who are involved and get into those conversations. So how you build those relationships throughout the journey and even after closing the acquisition. U for unified leadership. And this is very important to make sure that your entire leadership within your organization is aligned. And also the company that you are targeting at or looking at is also aligned with this story. We actually start with our M&A committee. We have a committee where we have a CFO, CEO, and others in the organization, and we discuss how we are going to do this acquisition, but then expanding further with the rest of the leadership team and actually having those conversations and making sure that everyone is aligned on one page. Next, I would say is as for the signals, seeing early signals in every signal is important. How you're going through diligence, what's the reaction to various conversations you're having when you are going through your diligence or integration conversations, what's the story that the other person is telling you and catch each and every observation, each and every word that other people are telling you. And then the last thing I'll say is the talent, how important the talent is for these acquisitions. I cannot emphasize that enough. Because I did mention previously about the technology, the financial story, and the culture story. The culture story aligns with the talent that you're going to be bringing. Being a strategic company, the engineers, the product team, the rest of the organization that we are bringing is going to be very important. And how you align with the rest of the team is going to be critical. So that's how I see it. The culture piece, how you are building, starting from the transparency, the relationship, the leadership and unified leadership, the signals that you are catching through the conversations. And then looking at the talent not as someone being acquired, but as humans, and be empathetic to the situation that they are going to be going through. And if you're looking at like from all various angles, then you'll be able to put yourself in their shoes and make decisions that are not just process-based or tools-based, but actually human-based.

You flip this culture thing around to your approach on deals.

Yeah.

So I like it. Can you tell me a story? Tell me about a deal that culture integration maybe broke down or some lessons learned?

I remember one story many years ago, what I was talking about, the unified leadership, that there wasn't an alignment on both sides. It was very much like a merger of equals. And I don't think that there was an alignment on the story, the strategic rationale among both leadership teams. And when we still did an acquisition and we started working on integration, there was, of course, politics involved. There was fighting going on and not just at the top level, but actually at the middle management level as well. When you are going through integration conversations, you can actually see the friction that's happening. You can see people actually getting protective about the processes, about the work that they are doing, and that friction continued to get worse and worse over a period of time. When there is lack of alignment, and especially from the top, they're not actually going to share the same story with the rest of the organizations. And you'll continue to see those friction points, continue to see the things that are breaking. And once the human connection breaks, then everything just follows, whether that's from the process perspective or a tools integration perspective and others. And my lesson from that was I could actually see that from very first conversation when we were talking about the integration governance, how the integration management office would run. And there was a misalignment there. There was friction there as well. We could actually see it from the beginning that this is not working as, as well. So my lesson was if there's no unified message, unified leadership, human connections are going to break throughout the organization.

Unified message and leadership. And that way you have this communication that creates clarity in terms of what the expectations are. Can you give me the playbook? Teach me how to not screw this up when I go do a deal.

From a cultural perspective?

Yeah.

Pointing a name for it. Yeah. Hasib's culture first M&A approach.

Yeah.

Teach me this part. Here's a good example of what went wrong. And then you're giving me this description of what could have been done better, which is make sure there's unified leadership, which I feel like is you have two sides coming together. Am I interpreting it right? What's this combined leadership and how they're going to work and what their message is. I feel like there is a point of friction where there's almost an assumption as an acquirer they're going to conform to your culture. And then there's vice versa where the people, the inertia, they kind of expect to keep things the same and not have to make these big changes. And then that ends up hitting those points of friction unless you got a different view on what causes that. But I just want to understand, like, if you were to turn this into a playbook of what's the right way to do it, make sure you don't have those challenges coming down later.

The example that I wanted to give was I've heard sometimes these comments from various teams that It's very much like a new hire. The new hire is actually going to follow your IT policy, your HR policy, your email retention policies and things like those. So how is that different that you're bringing 20 people in an organization and you're saying that, yeah, we need to treat this very differently, very sensitively. How are they different from other new hires? And the difference is new hires have actually decided to join that company. They have actually learned about us as an organization versus an acquired company who probably got to know about this acquisition through a press release. Just a few hours ago and they don't know much about you and they don't know about the story and the strategic rationale and how you are actually going to combine the company. So sensitivity and putting yourself in those shoes is going to be very important. And what I've actually seen is I have an example where there was an email retention policy and we have a certain policy that over these many years, all the emails before that are going to be deleted. And I had this very particular conversation with IT where I said, let's give some more time, some more heads up to these teams so that they understand why we are doing this and they have enough heads up to actually think through this. And again, the same new hire versus an acquired person story comes in that you just need to be slightly more sensitive and put yourself in those shoes that they need time to get stabilized, to get an understanding of how all of these policies work. So with that, my way of actually thinking about the retention of the culture is right from the beginning when we have had the first conversation with the founder, are we connecting with the founders? Are we connecting with the story that we are telling? Can I imagine myself being a colleague of that person and vice versa? Can they see me and the people who are involved in these acquisition discussions? So it starts from the founder conversation and how well you are aligned with them. The second thing I would say is how founders are actually telling the story about their employees, not just about their products, not about their financials, but about their employees and how the talent has actually built that organization. So that's giving me signals about how they operate, about how they think about the organization. And the third thing that I do in my diligence is also, of course, look at the common connections. And if I could find out from maybe ex-employees or maybe Glassdoor comments or reviews, anything that is publicly available, or I can do some research to actually find out about the people who are involved in this. So all of these three things that I've just mentioned is my diligence in understanding how employees think, what is important to them and what we can do as a combined organization.

A typical retention plan gets built after close— financial package, equity, maybe a 1-year bonus. And then in month 13, the person you built the deal around walks out the door. The operators who get this right start thinking about retention before LOI. And that's exactly what BuyerLed M&A is built for. It's the first standardized framework for buy-side execution built from 400 practitioner interviews and structured into a certification you can finish in 10 to 12 hours. If you're serious about getting this right before your next deal closes, go to mascience.com and look for the Buyer-Led M&A Certification. We'll put a link in the show notes.

When you do that, like this sort of your diligence, I like the way you had, you know, the common connections. What was the first part?

The founders and how we actually connect with the founders and then how they talk about their employees, how they talk about their employees. And then of course, the publicly available information about the employees and the common sense. Yeah.

Okay.

So that's all 3 of them are part of the diligence.

First tier, which you can do pretty quickly.

Yeah. The second thing I would say is after doing the initial diligence, actually having employee-by-employee level conversation with the people involved in diligence.

This is after LOI?

This is after LOI. Not think of employees as an Excel line item because I think many corp dev folks think of it that way or thinking of this as the synergy opportunities that you can find. But going through person by person, knowing what they're doing, learning about it. And if you are walking into the organization, if you can imagine yourself that this is all the employees, do you know enough about the function that they are performing, the role that they are doing for the broader organization? So doing that kind of diligence at an employee-by-employee level, you might say that it's very difficult for larger organizations. It is very difficult if it's a really long list.. If you are doing a tuck-in, then of course going through 20 employees, 30 employees is easy. But for the larger organization, the plan that I followed is at a functional level, if we can do that diligence, maybe it's not an employee-level diligence, but at a functional-level diligence, if we can perform that, that's another thing that we do. And then of course, as we are going through it, understanding what is important to them, what's going to be the retention that's important. I actually joined a conference. I'm actually going to steal some information from there where they said Pocket is not the most important thing, how you actually provide them with retention bonuses and everything. It's the heart, brain, and then pocket in that order. How you will win hearts of the acquired employees, how you are going to tell the story that convinces them to think about the combined organization. And then of course, what are the financial incentives that you're going to be providing? So yeah, doing diligence with founders, with the publicly available information at an employee level and then building your retention plans, whether that is from a story, winning their hearts, or from a cash perspective or from a retention financial perspective. Those are all the important things that we need to do.

I want to clarify how early the buyer-led model is to really put as much of this consideration in early. That's going to help you drive success later in the deal. What does that look like in the early stages, even like getting the LOI, how much clarity do you have around thinking through culture and like what's the factors that are going to make the deal successful?

I'll go back to the same thing, which is culture is a very difficult word that's not easy to be defined. You get different level of information at different points in time. Before LOI is of course at a very high level, at a founder level. After LOI, you are doing more diligence. You're looking at employee by employee level, then you're getting some signals, you're getting some signs that, that are helpful., and then you actually announce and sign the deal and you go through day one events and then of course post-closing all the integration activities. So the information that you get at different levels, different points is going to be very different, but it needs to be built on a strong foundation. It needs to be built on what's the talent going to be doing post-integration. And it also starts from what your plan is for that team and sharing that plan right from the beginning. Acquisitions may have a plan where you are maybe looking more from a customer acquisition angle or a financial angle.— some may have where there is actually a gap in the technology and talent is going to be very important. There will be places where there is a consolidation and there is actually synergy opportunities that you would be exploring. So tell your story first before you engage with the employees so that there is a level of transparency, level of trust that you have built and not leave it to people guessing what the intentions are for the combined team.

Get ahead of it. Retention. Can you walk me through what your retention framework looks like?

So heart, mind, and financial. So I think heart is through your action. Everything that you are doing is going to be judged, is going to be looked very closely. And whether that is a day one event, who is attending the day one event, what are we talking about? What's the all hands conversation going to be? How transparent are we? What are the intentions? Are they honest and transparent intentions that are coming in front of the people? So every action, every word that you choose is going to actually help you win those hearts. Second, with the mind, is the better together story and how convincingly you are telling that story. And not just for the deal thesis that you build that, but it's actually that you believe in it, in convincing people about that story so that they can be partner with you in that journey. And then the third thing from a financial perspective, That's about sometimes you actually have to do some salary rationalization. So you need to understand like where they are from a salary perspective versus where you are in your organization. So what's the rationalization that you need to do? Is there changes in salaries that need to be made or what are the bonuses that we are providing? What is the retention package going to look like? Is there a cash retention or an equity retention? And what are the earnouts that you have built for your founders? So all of those things are important, but they are interconnected as well. I have had this conversation with someone in HR team. We had a retention plan for the team, but there was actually not by anyone's mistake, but coincidentally there was actually a delay in making those retention payments and there was actually a delay in communicating that. We actually did that for the goodwill for people to be connected, but just by how payroll was being processed for some of those employees, created an optics, created an impression that is not necessarily positive. So while you had maybe won hearts of those people, the financial package that you have given just by certain actions or certain delays, that can make an impression in someone's heart that what the intention is from the team. They are very much interconnected and each and every action, especially in the beginning, is being judged from by the acquired employees. I've been in both shoes. I've acquired companies. I've actually been acquired.. And when I was being acquired, I had the same set of impressions about the other organization. So need to be very critical and on top of things that you are providing to employees.

If you totally screw all this up, what's your worst case scenario?

I think your deal thesis falling apart. Being in a strategic technology company, bunch of key people quitting. Yeah, bunch of key people quitting. There's an attrition risk and you're all solving those problems rather than the product roadmap that you want it to solve for.

It's interesting that when we talk about retention models, most of these conversations always is around some kind of financial retention plan. What are incentive plans, basically? Which you got to, but you got to all these other things of like, you know, your actions. Can I tell you the heart thing? And then the brain in terms of what the story is like, you know, you sort of led with those things. Do you really feel like that's the key thing? It's not more of like, how much money am I getting?

Because I think it's all—

they kind of play into each other. Like I said, most of the time it's purely What are we offering as a financial incentive? I'm looking at a deal right now and that's— I know there's going to be two key people on this deal and that's like right away I'm thinking about to get the deal model to work, you know, what kind of financial incentives do we have to lock them in and make sure they're going to stay through integration? And I'm not really thinking about the rest. Am I screwing that up already? I should be like nailing the story down and why we're going to come together. We're going to better serve the customers. We're going to be a stronger company together. Is that like what I should be emphasizing?

I think I put myself in those shoes, like when I have decided to join various teams, how did I think about it as a new hire? I've always chosen teams or people that I'm going to be working with. I've chosen the company and the reputation that the company has and of course the financial package that I'm going to be getting. But it hasn't been just one criteria. So if when there was actually a choice, for me to join a team and I was looking at comprehensively from all those angles. Think of those acquired employees. They didn't decide to do that, but the same criteria will be important to them. We cannot overpivot on one thing and say, yeah, financial incentive is not going to be important because I've won the hearts and the minds of the people, or vice versa, that I'm giving so much financial incentive that the persons or the people are going to be happy about. And it's not important to tell them the story or it's not important to win their hearts. You cannot overpivot on one. There is a balance that you need to find and the right balance. Sometimes again, you have to put more emphasis on one thing over the other, because if you just put an emphasis on financial incentive and let's say there is a retention packet for a year, you can guarantee that the person you have given that financial incentive, that person will leave after that one-year retention bonus. For example, the purpose of doing all of that was to actually look at long-term vision, the long-term retention. So you wouldn't want to be in a situation where you give a 1-year retention package and that, that person leaves on month 13th. So how you balance all those 3 things, in my opinion, is very important.

How early do you start thinking about retention? And I want to understand, like, how do you actually structure— how do you know this person is going to be more incentivized by equity versus cash or whatnot?

It's through the set of interviews with various people. Again, It's a very direct conversation with founders, and that's of course the very important one to begin with, getting their plan, what will get them excited about this deal from a financial perspective or from a story perspective or from a heart's perspective. But then interviewing those founders about their employees. If the other people in the organization are involved in the diligence, then asking them about their employees as well and getting that direct feedback, what gets them excited. I actually have a set of interview questions that I actually go through when we are doing the employee-by-employee analysis. And some set of questions are basically what gets this person excited, what's the challenging thing that this person is actually going through, what have they asked in their last performance review. So getting all those signals give you a full color, but then also be flexible at times. You may have actually started in your diligence and creating retention plans, but later on when you actually close the deal, you found out that there were other things that you were not considering because maybe they didn't come across in those interviews or those diligence conversations. So be flexible and learn from your early challenges and adapt to it. It's easy to do it during diligence because you are still building a business case. You are still actually selling that story. And sometimes post-acquisition it becomes difficult because then you get stuck in the processes and the policies and things like those. So finding exceptions, putting yourself in those shoes and be empathetic in those situations is very important. So agility, flexibility post-acquisition is very critical.

You got to have a good view coming in and you got to be agile going out after close. You served as a central IMO across integration. Can we talk through that? What did you learn? What does that function actually own? How do you keep integration like this cliché thing? It's like the black hole. The deal team does the deal, flips it to integration, moves on. And I'm just curious of like, what do you learn? What's the best model?

The thing that I've always liked in all my experiences in M&A, in all 3 companies, is I've been involved on both sides, the acquisition as well as the integration. So it's the same team, the same person who is involved in leading those. And the wonderful thing about that is that when you are building the business case as a deal person and let's say you are building assumptions that there will be these many synergies on the IT side, that you are going to discontinue this tool or you're going to find these headcount or non-headcount synergies. You are going to be responsible to actually implement those. If you don't feel confident in getting that done in post-merger integration phase, then that Excel math is not going to work. So the appreciation that I get when I'm involved in diligence as a deal person, whether that is building a business case or whether that is telling the story to the board, is how it will have an operational impact later on. When I'm leading the IMO organization. So every decision, every assumption, every Excel formula that we are making on a business case needs to have an operational plan behind it. Sometimes it's detailed, sometimes it's very high level that, yeah, this is how we will do it, or at least have a conversation that this is what will make it practically possible. It's not to say that we have always succeeded. We have failed many times that there was an assumption and we thought that, yeah, this is going to be the operational impact. And this is how we will actually do all these 5 or 10 things. There have been cases when they don't succeed, but at least have a foundation that you can tweak later on. So there's a benefit, and especially in my career, there has been that benefit where I was responsible for both the acquisition as well as the integration side. Now, what it means for me as an integration management office leader is how you are bringing the rest of the organization along. How you are telling the story to the rest of the teams who were not involved in diligence, how you're communicating that, how you're talking about the north star that was important for the deal to be successful. And then keep on telling that story, keep on communicating, keep on managing and coordinating across various teams and provide them with the guidance, provide them with the decision-making that's important. And sometimes it's fast decision-making. So the IMO, in my opinion, is the managing, the coordination, the communication, the deal thesis story, and making sure that you are providing the feedback and helping with the decision-making. That's very important to various teams. You are sitting right in the middle of those conversations where you are hearing from finance or IT or product or engineering teams that those teams may not be actually hearing from the rest of the folks. So you are the common connection that can connect those dots and help those teams think through the implications of the decision that they are making to the rest of the integration story.

It's like a lot of engineering thinking to unpack there, that you have the assumption that you think through what the operational impact is and that there's some kind of operational plan behind all these assumptions. And then you really think through what this looks like end to end.

I like to be detailed. I like to have a, like I said, plan behind every assumption that we are making. I like to feel confident with those. But again, this is not to say that you can have answers to all 1,000 different pieces of the puzzle that you are trying to tie together. But if you have a strong foundation, then you can build on top of it and then you'll have an ability to be flexible when things require some changes.

That's a good one. We should expand on that, put it into OmniScience framework here, the buyer-led framework. Yeah, really. I feel like there's an assumption that we always talk about validating those assumptions, but I think that engineering lens of like, okay, let's really define it so we can clearly validate it, but even more so operationalize it so that you will be able to achieve it.

Yeah, you actually asked me this question in the beginning, like you were just saying, the engineering mindset, the analytical mindset, the project management mindset. Having visibility to how the product organization works, having worked in the financial domain, and of course the MBA experience, all of those things, just having the appreciation of how different pieces of this puzzle work is very important.

How about when you have to pull people in just to get their take? There's like some of this thinking, but then there's also like it goes back to that relationship across organization. You're probably pulling in people as needed to get more of their perspective and validate some of these assumptions.

I sometimes say that relationships open doors and not the processes or the policies, because you need to phone a friend in different functions to get a perspective. You need to brainstorm. I always approach conversations by saying, "Hey, I don't think I have an answer, but I want to be creative and I want to be collaborative. So help me think this through and I'll help you think this through.", and together we'll come out of this conversation with a solution that may be workable. And if not, then again, we'll be creative and collaborative in adjusting it. So relationships have always been very important in acquisitions or integration. I've always said in various rules where I say an acquisition or Corp Dev in general sits in the middle where there is a neutral perspective that sometimes you bring. That's why me being in Corp Dev has sometimes been involved in strategic initiatives across the organization. It's not related to an M&A project, but maybe it's a transformation project or maybe it's a corporate strategy work that we are doing. And you have got that kind of an exposure or perspective and relationships that you have built across the team and you have a neutral perspective that you can hear a different perspective coming from product versus the sales and you bring in both those people together and have a plan or a perspective that works for, for both the teams and your customers being in a place where you can bring different perspectives and solve those together is a remarkable place to be in.

You'd be a great industry spokesman for all the corporate people in the country. One of the things we didn't talk about, but I want to hit on briefly, is these investments or the minority investments that you make in startups, because you do that, but you don't have like a dedicated venture arm or fund. You essentially do it. You mentioned briefly about partner, invest, M&A. Tell me about where that fits in. Is it to facilitate getting a foot in the door? Like, how do you think through making those kind of bets? Is access to technology— what's the driver of doing those kind of minority investments without a formal strategy?

The answer is all of the above. It sometimes is foot in the door. It sometimes is what I just mentioned about the creative and the collaborative way of working through the relationship. The other company, the other team may not be in a place where they're looking from an acquisition perspective. An investment with that company can put both of the teams in a place where you can test the thesis first. You can work together, learn more about each other in a different kind of relationship, which is an investment and a partnership kind of relationship. And then over a period of time, you learn from it and you maybe go through still an acquisition, but you'll have a different and a more comprehensive perspective in the better together story. So sometimes, yes, it has been a foot in the door and leading to an acquisition in the future. Other times it has also been maybe acquiring a company just doesn't make sense for both. And that has been the case right from the beginning. You don't have an intention to do an acquisition in the future, but there is a co-build, co-market, co-launch opportunities that you can explore and then do an investment. Third thing I would say is there have been some investments where we want to know more about the industry and the market. We want to look at the high-performing startups and be part of their journey, whether acquisition in the future is in plan or not, whether that is going to lead into any co-build or co-market or co-launch opportunities. But just knowing that team, knowing that space, knowing that market is going to be helpful for both the organizations, that's important. But like you said, we haven't been a formal venture arm. It's more like opportunistic and thinking through those conversations. And like I said, my first LinkedIn reach out sometimes is Let's explore. Let's look at what the strategic story could be. And it is true because we have maybe in mind an M&A story, but when we talk together, we decide that, yeah, investment makes more sense. So it was an honest and transparent reach out when we say, let's explore.

Yep. I like that. I like that. Keep your options open and use it as needed. Can I hit you with a few rapid-fire questions just to get your take on it? Acquirers always say they want to preserve the culture they bought, when is that actually right and when is it just something you say to close the deal?

I learned from one of my colleagues. She always used to say, what's the secret sauce of the company that you are looking at? Knowing that in diligence is very important, but maintaining that is even more important. So while again, going back to the same thing, culture is a word that, that's not very well defined sometimes. It's maintaining that secret sauce, it's maintaining that culture that's going to make both the organizations successful. So while it's a cliché sometimes that, yeah, you maybe are using all those fancy words to convince the other side, but the deal value is lost if you're not careful and if you are not deliberate about it. Maintaining the secret sauce, maintaining the culture, what made them successful is critical. This is not to say that when an organization has been acquired or has been absorbed by a larger organization that they are things that will change, but what made them successful needs to be retained.

Try not to break stuff. Yeah. And Diligence, what signals tell you a culture integration is going to be hard before you're ever in the room with employees?

Every observation, every conversation, every word that the other person has used will give you, you signs. And sometimes as deal folks, we may have a tendency to ignore those because we are maybe in a deal fever. That we do want to do it.

It's like leaders talking bad about their employees. Yeah, yeah, really.

Those are important and cannot ignore. And I have a good one.

So we got a couple you could, you know.

Okay, exactly. So your gut feeling, I feel, is always right and you shouldn't be ignoring those.

Small team, full mandate. What breaks first when deal volume picks up?

I think the depth. Yeah. What I mean by that is when you are looking at the variety of acquisitions, the depth in your observation, the depth in your diligence, the depth in your integration plan may get lost, not necessarily in just Corp Dev, but in your overall organization as a whole. And so I think it's the quality versus quantity. I see.

What's the craziest thing you've seen in M&A?

That's an interesting question. I would say walking away from the deal because it's not easy and sometimes you are too far in the process that you feel that you have spent so much time, you have sold this story to many folks in the organization, to your board, to the founders, but you have found things that are not workable and you may be ignoring some of those. Tell me, tell me. But we are talking about the cultural signals that someone talking bad about their employees.

But you've had it where you're like post-LOI and you just— culture drove you to walk away from a deal.

We have. Yeah. Yeah. What happened? It's more about understanding what founders believe the story to be versus what an actual cultural story that exists. There was one deal where we worked with a founder who we later on found out was actually in a competition with his family because many people in his family have been billionaires and been very successful. And the reason why he was building an organization and building a team is from that competition perspective. This was more led from his incentive to be at par with those conversations with those folks than thinking about the employees. And when we dug deeper, when we learned more about the employees, when we learned more about the attention that the management has been paying to the organization, it wasn't something that was working out for us. And we decided to walk away in that situation. That's probably the right call.

Yeah. Wow. It does happen. It's just like, this isn't the right thing that's going to fit well and save the headache. I see. This has been a great conversation. You've given me a new perspective on a culture-focused approach to M&A, helping me become a better M&A scientist.

Thank you. Thank you for inviting me. And it was really nice talking to you about the journey that I've had. Looking forward to more such conversations.

If you're still listening to this podcast, My fellow M&A scientists, I would love to hear from you. Actually, it's my favorite thing now. I get quite a few people that reach out on LinkedIn. Make sure you put a little comment or note so I know you actually listen to the podcast because I get tons and tons of spam on there, and I'll connect with you. I love to hear any kind of feedback in terms of topics we haven't covered that you'd like to hear covered, any kind of criticism on how I can do better at being an interviewer. I'll take it. I'm trying to get better. It's always fun. We got a lot of fun stuff coming up too, so keep up with our newsletter and just follow us on LinkedIn. Till next time, here's to the deal.

One thing Hasib said that I keep coming back to: every assumption you put in the business case needs an operational plan behind it, and the person who built the assumption should own the outcome, not hand it off, but own it through close and beyond. That's the whole model behind buyer-led M&A. Same team, same accountability, end to end, from first conversation to close. The certification gives you the framework to actually run it that way. If you want the full framework, the buyer-led M&A certification is 10 to 12 hours, self-paced, and built by the practitioners you've been listening to. Go to mascience.com, check it out. We'll put a link in the show notes.

Thank you for taking the time to explore the world of M&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&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, kison@mascience.com, or you can text me directly at 312-857-3711. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter. Again, that's mascience.com. Here's to the deal. Views and opinions expressed on M&A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.