The Role of CEO in M&A

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I'm Kisam Patel and you're listening to M and A Science, where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies, what actually happened during M and A deals. Hello M and A Scientists. 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 about how to optimize your M and A practice, or want to get involved with our community of forward thinking mna practitioners, visit mascience.com and subscribe to our free weekly newsletter. If you want to keep up with us on the Go Head LinkedIn, follow M&A Science. I'm your host, Kisam Patel, CEO and founder of M and A Science. Joining me today is Kevin Lynch, CEO and board member at Optiv. Optiv delivers strategic and technical expertise to more than 7,000 organizations across every major industry. Optiv helps companies manage risks while accelerating business progress. Today we're going to talk about the role of a CEO in M& A. Kevin, how are you doing today?

I'm doing fantastic, thank you for asking. How are you doing?

I'm doing great. I'm hanging out. We're both in California. I'm in the heat just outside of Soycort National Park. I appreciate taking time from running a business to have a conversation. Can we kick things off a little bit about your background?

I'm often asked about my background and how did I arrive where I have arrived. 38 years of professional experience and I would tell you I've meandered through a professional career that's been about creating options and harvesting the most effective options in that whole mix. But along the way there's been an interesting M and A story that's emerged. In my youth I did a lot of work as an advisor for offshore manufacturing companies, notably in Europe, trying to come into the US And a lot of that was around organic growth. But eventually that turned to helping them think about building foundational capability here in North America, which took you to the place of looking for acquisitions. So that's really where this started for me as a small smoldering passion and then from there I went on to do other things that included looking at acquisitions of my own and then eventually into my first strategic where we looked at buying and scaling up the business and eventually into a big four environment where again that passion found some real tinder and groove. I found myself in very large M and A environments and at the time a real, what I would say, immaturity to the firm's offering. So I got to play a quintessential role in defining the value proposition and building many businesses for that firm. From commercial diligence to strategic diligence to M and A strategy and targeting and deeply invest in and enhance the way the firm drove integration and more importantly, how we faced off against clients against that entire spectrum. And now again, as a strategic leader, titles are worth what they're worth. But as a CEO, I get to once again use that incredible tool set and experience base that's been garnished over 38 plus years and really use it for my organization today, Optiv. It's a place that I have deep passion about I love our people. More importantly, I love our mission. And as we continue to grow, inorganic growth for M and A is a part of that. So I get to use that toolkit more. So I feel very blessed that I've had an amazing walk through this life, but notably that there's been an M and A story in just about every facet of the journey.

Yeah, you got a pretty well rounded experience of M and A exposure and all these different roles, and then you've ran through a number of deals already in the current role.

Adoptive We've been busy, but not as busy as I'd love us to be. I think our industry has been long rumored to be consolidating. People have watched and waited, and I think now you see more fervent signs of it happening. Some fits and starts for sure, but more consolidation this year so far than I think we've seen for the prior four. And so I think you'll continue to see a lot of activity and for us, we'll participate in that.

How would you define your role or where does it start when it comes to M and A?

To answer that effectively, he said, I have to go back to what's my primary job as a CEO and look, be under no illusion. My board of directors holds me accountable for everything, and they should. But beyond that, you really have to think about what's your core role and responsibility as a leader for an organization. And I come down to four essential jobs that the CEO should do. And I speak passionately about this and I talk to a lot of my peers about this. First and foremost, it's strategy. Nice word. You'll find it on thousands of books if you go to a bookstore. What does it really mean? It's about choices. How does an organization make choices in light of all the external and internal factors? So strategy is the first job. The second one is capital allocation, where if you think about those choices and you think about any organization and their requisite constraints, whether that's human capital or economic capital, how do you allocate your capital for the best effective return? Third is around what I call culture, and many people do as well. And culture is unique in that it's not something you go on a nice screen and figure and it just shows up every day the way you want it to. Culture is a mosh pit. And as a CEO, you've got to get in the pit and you've got to help find it, control it, boundary it, foster it, and grow it in a real positive way. And when you do it's an incredible leverage. And then fourth one that I don't think people talk about often. And in fact, if I go back to that famous writing by Michael Porter about the Five Forces model, every time I pick that back up my dusty old copy of it and look for it, I don't really find it. That's called battle rhythm. I think in a world where 70% of the world's GDP has been digitized, there's been this interesting little byproduct. The byproduct is speed. Companies today that can move at speed win more often. And so I think for us as CEOs, moving faster, creating that battle rhythm for the organization driving us to go faster is a quintessential job. So those are the four ways that I think about my days, my weeks, my months, my years, my quarters, and then drawing that down on an M and A lens, like, what role do I play? Those four things still come to play, like our strategy. Where are we looking to grow our capabilities? And is an inorganic channel the best way to do that? Capital allocation. Should we be putting more or less to an inorganic expansion or anything? When we find a target we love and we really find affinity with it, we continue to unpack through diligence and still love it. And we love it at the price point that makes sense for us. So it's accretive. Someone better get in that mosh pit with the other side, because at the end of the day, there's people there and you've got to engage them into the new organization, whether it's an acquisition or merger. I don't really love that phrase or a combination, which I do love. How do you make them part of the family? And then how do you move through that integration, which is a fragile period for any company? How do you move through that at pace so you reduce your risk? De risking is one of the least talked about but most important aspects of being a successful acquirer.

Strategy, capital allocation, culture and battle rhythm. This is our interview right here. Let's take these apart.

I love it. Let's go.

The strategy part. Well, I was curious. When you're giving me your background was like your philosophy of M and A, do you focus on finding really good deals or do you really shape a strong strategy and make sure M and A opportunities really fit well into that strategy? Because I feel like at some point companies tend not to be a perfect fit. Do you shape the strategy to make them a fit or what does that look like?

This is a great question. And I think that there's many people that will come at it with their own style or disposition maybe is a better way to phrase it. I think you have a natural disposition. I think there are people that are really effective acquirers that are value seekers and they will go and do a deal at a certain price, but not in another. I've heard the phrase used you buy your way to success versus sell your way to success. I think for some that's been a proven success formula. For a vast majority of others, it can be a very disastrous formula. I think there's also folks in the world that have a disposition or bias, which is strategy above all other factors. Price doesn't matter. Pick the right asset, make sure it's a great asset in light of your strategy. I think that for some people is a great success formula and for others it's a really quick way to go broke, where you'll spend whatever it takes to get a deal done and look back years later and wonder why did you do that? Or try to explain it away. For me, I think I'm a confluence of all of that. I do believe that strategy plays a really big role at the table. I think you have to look at where you're trying to go as an organization. What really will foster growth? What does your market really want from you? Not just today, but in the near medium and long term, what are you building towards? Where does your market need to go and how do you effectively go at a pace and at a distance and at a space above and beyond those requirements? So. So how do you mildly or wildly disrupt your space and continue to grow? And then that brings you to the quintessential question of do I build it and am I capable of doing that at the right battle rhythm, at the right pace, or do I go buy it to accelerate my journey? Is my capital better used to go faster through acquisition, even with the implied risk of an acquisition versus building it, which also comes with a degree of risk? And so I think that strategy lens of thinking about how assets out in the world plug and play into you matters. I think there's also a competitive landscape or competitive intensity factor that you have to consider, which is do I disrupt the market? I'm not trying to get the HSR folks in the world all schooled up with this around changing the competitive landscape so far as to violated sort of antitrust rules. But rather there are moves that are still viable under HSR that accelerate your strategy in a very powerful way. I think you have to put that at the table, but at the same Time I would say that I have more of a leaning to a value buyer than I do of an exuberant any price point buyer. I've looked at certain markets as an example. Like we looked at our federal market and for us on a legacy trailing basis, it was too small of a business for us, too small on the proportion of Optiv in that when it's too small, it's really hard to get behind investing in that business on an organic basis. It's just the returns to scale aren't there. So I faced a really interesting challenge. Do we exit that vertical? Which I think is really important, not just on a sell to basis, on a serve basis, but as a trading partner with the threat that we face for our clients. That's 80% nation state and organized crime. I need a good trading relationship with my federal counterparts around risk and threat beyond serving. And so I need to be in this business, so I need to find a way to get there. And inorganic was certainly a great lever to pull. But I will tell you the list is long. Of the assets we looked at, the disposition or attitude of the folks that we gave prices to that wanted more, felt they were worth more, even in a few cases were offended. It's long because I know where we would strike value, but it was worth to us. They might have great pride and admiration in what they built, but I know what it's worth to us and I know that combined with what we could build together and giving them a piece of that future journey was a great deal for all. But I'll get to a point on a deal where there's a line and it's not ego, it's not emotion, but there's a logical line and when you start to frame beyond it, you're giving up something that's really principally important to you. And you at some point have to ask why am I doing this? I tend to come at this case on from the basis of not only being that value buyer by disposition, but being really strategic in our choices.

Yeah, it sounds like you got this future vision where you want to steer the company towards. And with that comes these assessments of buy versus build. I guess the other thing I was curious about is like when you start looking at, I gave an example of that federal vertical of how much of it you lean into. An assessment of are you going after market share versus capability? How do you think through that in terms of getting a sense of exploring those inorganic opportunities?

They all play a role. And the federal example for us it was a case of both where it's not only giving us scale and reach and a client base that we cared about. It was not only just getting talent that we didn't otherwise have in the space, but. But there's also certain capabilities that we were good at but not great at. So you would say all of those attributes came to play. But there are times when you have to look at acquisitions that are going to be more polarized to one or the other, where you're gonna get scale or market share, to use your term, or you're gonna get capability, but less market share. Without disclosing it, I would tell you we've been looking at an acquisition over the last four to five weeks as a leadership team. There's no scale there, but we like what they've built so far. And there's differentiation in terms of the capability. That's no less attractive an asset for me to look at than looking at a place that has real scale in a vertical that we just aren't big enough. There are horses for courses to use that old coin frame versus one's good and one's bad. It's context specific.

It's almost like you have a matrix to sort of look at that and figure out where it's going to fit. I was curious about that too because I'm looking at some opportunities and it feels like nothing's a perfect fit. It's always, hey, we have this idea of expanding, buying like competitors for market share and getting into different geographies. But then every time we find a company don't have the exact same, this would integrate really well. It's got some different capabilities around it. That's where I was curious, like, how do you look at that? And it sounds like that approach of really knowing where the circle is going to overlap and how much of that fit you're going to have versus maybe some of it's not an exact fit.

I love the question because I think this is going to take us into a couple of deep wells of insight or exploration, perhaps that better. I think people have looked at M and A as a continuum of activities for a very long time. But one of the things I see that's challenging for a lot of organizations is they look at them as process steps or protocols that are somewhat separated in that elongated value chain. In other words, the person that does the deal doesn't usually care about the integration. The person that does the integration kind of lives with the sins of the buyer. And so there's this passing of the asset to various capabilities. And I think that's a tragic mistake. And so to your point, you start talking about maybe the deal isn't perfect. How do we know what's the lens that tells us it's not perfect? Have we found something minor? When we've done diligence, that it's an accounting issue or a cash issue or a debt issue or a liability issue, then we have to look at that in the context of what's the escrow reserve, how much exposure is it? Is it indicative of something bigger? Those are really all important and could be material items. So not discounting any of them. But it's really tactical, right? Very, very tactical. Or is it something different? We look at the company, we find that, wow, we don't like the way that they sell. It's very transactional, not relational world relations or we don't like the culture. We think that's going to be a really tough mix. What's a leader to do to really put a lens to that and ask the more difficult strategic questions? And I would argue, I would profess to folks that the absence of an integration thesis at the deal table is a real mess, but truly effective. And I can actually prove this to you. But let me wax politically for a moment. I think the truly effective acquirers in this world are thinking about that integration moment. At the same time they're thinking about the deal construct. They may not be doing it in depth and they may not be doing it at scale yet. But I tell you, any great leader has got a thought in their mind about what they're going to do with the asset. I call that an integration thesis. And when I was a practicing professional in this space, every single one of my CEO clients, I would make sure that was resident as they were thinking about the deal. I didn't care whether it was in PowerPoint, in Word, nice prose, or on the back of a napkin over a drink. What I cared about was there was a thought process to think about. If you're successful with this deal, what are you going to do with the asset? What are the boundaries you're going to go? What's the high level operating model that you're going to consider? What's the pace that you're going to integrate? How are you going to approach that integration? Is this a merger? Again, a word I don't love because it connotes two equal parties coming together and I don't think that ever works. Or is it a real combination? You're trying to bring the strengths of both organizations, put that thought process down to paper and let it Shape your deal. That gives you a great lens as a senior leader to really think about those strategic issues. And to your point, maybe it's not perfect, but why isn't it perfect? Is it something we can remediate? Is it something non material or material? Let's have the right lens to have that dialogue. And I think if you do that, you end up avoiding doing a bad deal and you end up doing some really good deals that you thought about full stream.

I think that's a good exercise to do is build that integration thesis and something that you should have at the deal table. There's a few things I heard in there. One is how you can actually integrate this company. I think the go to market seems like another piece of what is this selling motion going to ultimately look like. And then the why, like the messaging of why we're doing this deal. Was there anything else I missed in terms of why? What you should be putting in consideration for integration thesis.

People can take that sort of point of guidance and go in all myriad of directions with it and all myriad of depth. I'd be cautious to say don't try and go build out a 65 page. I'm being illustrative of my comments. 65 page integration playbook based off that thesis. Keep it simple, keep it short, keep it very organic, write it with passion. Because the the best deals I've been involved with. The CEO can literally take that. Whether it's again a document, a napkin and they can actually sit with the other side. As you start to come together, you've gotten over the deal points. You're at that point of whether under the auspices of regulatory review or otherwise, you could sit with the other side and make it less about sides and share beyond the price point and what we paid, et cetera. Getting out of the deal docs, getting out of the definitive agreements. This is what we saw, this is why we're here. This is my thesis of how we come together. That's a really powerful moment. If you're the acquirer, to use that term, and the other side is sitting there looking at you, I can guarantee you I can actually prove this as well by every sentiment analysis that I've ever done. In any deal, you're being acquired. And having been acquired, I could tell this to be certain. There is an enormous amount of uncertainty induced into that environment. And in uncertainty, or in a vacuum, said differently, people will fill it with the worst possible conjecture. You walk into any acquisition and you are quiet on the topic of what you want to do. I Guarantee you that question will be answered. It just won't be answered by you. It'll be answered at the water cooler every day, every hour, and it will be answered in a way that you couldn't possibly be that evil to have thought of those ideas. But that's where people go. There's a degree of untrust, there's a degree of uncertainty. And it's your job as a leader or a leadership team to really fill that vacuum in, to be more precise and prescriptive. It's not about hearts and minds, and let me tell you, all the things are going to be rosy and perfect. It's about transparency. The things you can say at that point in time, the directives and imperatives you want to put in play, why you thought the asset was a phenomenal ad to the business and portfolio that you have. Share that and you'll never take uncertainty to zero, but you'll take the temperature way down in the room. And I would argue you'll find that you'll be much more successful on the other side.

What can you say when there's obviously early parts of the deal, it's more executive day, executive conversations. At that point, can I be pretty upfront of, hey, this is what the vision looks like for acquiring your business and how it's going to come together.

For every M and A engagement I ever was in as a practicing professional, every C level officer I served would ask me the same exact question. Let's use the word that's often used in deals, synergies, headcount reduction. When can I talk about it? Should I talk about it? There's been some interesting studies done on this. They're inconclusive. So I always tell people it's a little bit of a choice. I could argue passionately what data to prove to you. Don't share that. And I could turn around and take the other side of the podium like it's a presidential debate. And I could argue passionately with data that it's a great thing to talk about. So in other words, the samples are different. But what's common in that is if you're the senior leader, CEO in this context, your brand's in the mix, you're actually on trial and you don't really know it. If the data is flat and it doesn't tell you one direction or the other, take the high road and say more versus less. Now there are illegal and regulatory things. You have to be considerate of any M and A transaction. If for sake of discussion, it's a scaled transaction and the organizations are going to be under regulatory review. And so there's a period from reaching definitive agreement to actual close. It's a wonderful period of time, by the way, really productive time that can be used to plan prospectively, but that's a different environment. And so you have to make sure you're leveraging legal counsel in house as well as external to really understand if there are boundary conditions you don't want to go over, if there's things that would trigger the regulators in a way that would not be healthy for the deal getting consummated. So that might guide and shape and even create some chalk marks within which to work. But notwithstanding that, I would generally in my history has been biased to say more versus less. But talk about it in terms of vision versus down at a granular organizational choice. Talk about the art of the possible. Then also talk about the things that are going to be tough. If it's a case of you're going to effectuate 5% headcount synergies across the board, which is not uncommon in a scale deal, somewhere between 5 and 7%. If you get on that pulpit, whatever it might be, a zoom call, or in person, and you tell the leaders of that organization that's joining with yours that you're going to do none, you've lost credibility if you tell them you're going to look at it over time. I would argue you've lost credibility if you tell them it's a natural byproduct of coming together and you start to turn the conversation in a different direction, which is for those affected. We'll do that with obvious objectivity and a duty of care that matters. And let's not forget the fact that those that remain after this combination really should expect us as our shareholders, expect us as our governance and our board, expect us to use this allocated capital and generate a great return and create opportunity and options for everybody that remains in the company. And so that synergy isn't about some fanciful topic or the CEO looking good. It's about generating the right economic daylight and capital that you can reinvest back in the business and grow it to create all that options and optionality. I look at this through the point of be transparent, be visionary, be direct, be honest.

That's extreme transparency right there. Like it's literally, this is our whole investment thesis. This is why we're doing it. This is what we're going to do with that capital, how it's going to increase shareholder value.

I would tell you that someone could Make a very cogent argument, 180 degrees different than what I just said. I'm going off of a long history of experience of taking that higher road route on the mountain as opposed to one that's a little more cloaked in the trees. And it's worked for me very well. But I think if someone has a natural bias or a natural comfort zone, take the route that's best for you. I've had a client in a public environment that I really appreciated what he did in that it wasn't an area of counsel for me. He was advised by someone else, but his investors were just all over him about tell me what the synergy amount is in this deal. And he just refused to answer the question. I really appreciated that and I think that's a fair stance to take. If I was sitting in front of an acquisition tomorrow, would I want to get down to the dollar amount in synergies? I wouldn't want to do it publicly. I wouldn't want to do it privately. I wouldn't want to do it with my employees. I would obviously do it with my board or the investment committee around the totality of the deal, economics and synergies involved in that. But I wouldn't shy away from the fact that there were going to be some. I think that's important to be transparent because again, your brand and the organization matters. If you're going to ask people to rise and do and conduct the strategy of the organization and go forward with your leadership and direction, your brand matters a lot. Don't tarnish it over something so simple. So elementary leadership is about being able to deal with the tough choices and being able to deliver the tough messages as opposed to just only being able to do the stuff in the sunshine and the happy days. And so do it. Don't be afraid of it.

Great advice, Kevin. Can you teach me capital allocation? I'll give you context why this is top of mind. I run a company. We're pretty small, like 50 people, 10 million run rate. But I'm already sensing this is something I need to get better at. You have internal feeding into organic initiatives. Every department wants their own budget. I'm trying to keep some cash reserve to do some inorganic activity where we have a little segment that we could potentially acquire small business and start building up our MA muscle. Even though we're pretty early at that. I'm just already seeing that, like, wow, I need to start wrapping my head around gap allocation. I figured you're working on a much bigger scale. Maybe there's some Things I can learn from you.

Let's take the M and a part of that. Put it up on the shelf for a moment. We'll come back to it. Let's just talk about it. At its essence, every organization has some degree of constraint. I haven't met the one that's unconstrained just yet, although I think there's the hyperscalers generally have a ton of cash and can do a lot of things. But there are limitations. In any environment, whether it's capital or whether it's people, there's going to be some limitations. There's pace limitations, et cetera. I think any great business leader has the imperative, the necessity to think about the period ahead, whether you plan annually like we do, or you do it somewhere different. But to plan ahead and to think about that period of performance and to think about all of the market signals that you're receiving. And those market signals can be varied. They can be from customers, they can be influencers, they can be analysts, they can be your employees. What's the market telling you? And then you have to do along with your executive team. Because I would argue this isn't the job of one, it's the job of many. You have to convene and really think about. Operating discipline is the term I often use at Optiv. The operating discipline to discern between choices. There are some things that are more short, medium and long term in terms of a temporal orientation. There are things with lower and higher return. There are things where there's a different degree of risk of execution. So those are just three variables that I use as a consideration. I tend to go beyond that, though. I tend to look at who's leading the initiative that I would invest in as if I was a public or private investor. Not only in the initiative, but in that person. Like they're the CEO and what's their historic track record of delivering with my invested capital as a company, so I tend to put that human element to it as well. And then I tend to put another, which is around. Is this a necessity or is it an aspiration? One of the things you'll find when you get really good at this and you do it at scale is as your business grows, the existing parts of your business will want to consume a lot of capital. And one of the dangers as a CEO is you allocate all your capital to the business of today and no capital whatsoever to the business of tomorrow. And you'll optimize it and you'll polish it up and it'll be a Great business, but you'll be giving away some future value in doing it. So I think you have to throw that dimension into it as well. We probably look at more data points than just those five, but those five give us an effective scoring matrix. So I can now look at the portfolio and say, how much am I putting towards new ventures, that sort of business and tomorrow element, Do I think it should be 80% of our capital? No. But we are a growth business. So if it's zero, that's a problem. That for me is usually I'm looking for 7 to 15% of my portfolio going in that dimension, maybe staying away from Wildcat oil drilling opportunities, but core to us, a great expansion. I do think there's a certain amount that you've got to feed the existing business, but you have to have the discipline to say is it going to make an economic return or is it just going to make the people feel better? Because there are certain parts of what you do that over time will commoditize in any business that happens. So how much capital do you want to put behind a commoditized business? And are you willing to make the disciplined choice to say it's good enough today, let's continue to run it and harvest the returns from it. And you have to look at all your choices through that lens. Now let's bring the M and A thing back in off the shelf. Because I. I think it's important. A lot of people would ask that question a little differently than you did, which is at the beginning of the year, how much of your capital should you put to inorganic growth versus organic growth? And I think there's real danger in that question as framed because if I put that capital up front and say that I'm going to buy with that, there's a real danger that if I go start falling in love with assets, I'll do a deal to spend the money versus doing a deal because I think I can make money. And so I'm always reticent to do that. I think that's okay to think about available capital and the propensity of that capital to be engaged. So I never say zero with respect to inorganic, but I never want to make it so precise that I'm trying to fill it in like I would be with an initiative around the business of today or the business of tomorrow. I think of it always as if I find a really good deal asset that would make a big difference for us, whether it's scale and market share or capabilities. I'm going to look at it pretty carefully and say I'll find the money some way, somehow.

I want to make sure I got this right. So market signal, which I think ties right back to strategy. And then you look at the return against risk. Then you're also looking at the leader that's going to be driving this initiative, what their potential is, what their track record has been. Then you also look at the factor of this is a necessity versus an aspiration. The other element you mentioned is are we looking at this from the view of business of today versus business of tomorrow? Did I miss anything?

Time, just time to value. Is it important this year or is it important three years from now? That one signal matters a lot because if you think about it, there are seasons in the business, not ours, but let's say we'll conject a business that's more susceptible, less immune to interest rates. And so maybe they're going through a tougher time right now with rates being higher, or maybe it's a commodity centric business. So inflation has really put a hit into their P and L. I would as a leader start to look in businesses like that. I would start to look at things that were more near term effective because I've got to make sure I'm generating the economic value today so I get through whatever these destabilized times are to better times ahead. If I'm in a business that's less susceptible to that, I'm going to make some near choices, but I'm going to make some farther choices as well. So I think time is a really important consideration.

There's a lot of things we're factoring in and I feel like a lot of, I guess, stakeholders are battling for the same budget. How do you manage that? Because you got going to have a bunch of different verticals, internally organic, you got external, inorganic, just the sheer variables across the board. Like how do you manage that?

Maybe I'm a complex guy. Maybe I'm a simple guy that grew up on a farm. And I would tell you that I've never shied away from complexity. I think it's okay for complexity to arise. But when I think about my leadership team and who I put at the table with me, I'll tell you one thing right now. I don't look for homogeneity. I actually really like diversity. Not because it's favorable today to say that, but I look for diversity for many reasons. But I think diversity brings perspective, difference and brings with that perspective, difference, insight and insight's goal. So I want people at the table that are going to think differently. Two, I want people at the table that are courageous enough to say what they think. So I don't pack my leadership team with a bunch of people that want to say yes to me. I look at them for the folks that will tell me the honest truth. They'll tell me their perspective. Because again, someone's ultimately going to make a call on something. There's delegations of authority in any business so that it's really clear who makes the call on something. But I think making the call with more information around you, it's not consensus, it's actually informative, is really valuable. And then coming back to that yes, no, it's one of the hard filters for me when I think about a leader in my team or if I'm influencing the leader down in the organization, which I try not to do because I don't really want to be in someone else's choices. In terms of the reporting structure, I'm looking for the person that finds as much comfort with the use of the word no as they deal with yes. Because it's easy to say yes. It's much harder to say no. People that have operating discipline, that can discern through facts and figures and perspectives and make a decision and are comfortable with their direct reports to talk about a yes and a no are on their way to great leadership. So if it comes down to a transaction and someone says, but I really love this, it's okay to say no. If it comes down to five investments and you've got capital to allocate against two, it's okay to say no versus trying to underserve and under invest in all five, hoping that you're going to have a differential outcome. Now that sounds almost Darwinian harsh. And I know it could come across that way. It's not about being harsh to an individual, it's about doing the right thing for the totality of the business as seen through its portfolio, that should benefit everybody. But I will tell you, as my walks through life, 38 plus years as a leader, I see less of it than I'd like to see. And if I had one lever to pull to develop the team in my proverbial shop, it'd be around that.

Operating discipline, strong leaders, a lot of debate, and really put it all on the table. Kevin, the thing I'm really curious about is how do you communicate your approach to capital allocation? Because I'm sensing the board wants to know. And do they care?

Oh, of course they care.

Is it on a couple of PowerPoint slides or what does that look like?

Yeah, look, that's to me, the substrate. You got to get to what's the substance and then what's the engagement. There's not a day that goes by that I don't appreciate being a private company, private equity backed. It creates a lot more latitude and range that I as a leader can work within. In my own opinion, I think public company CEOs are better than me in many ways because they're able to operate with all of that plus the transparency. It's not that I aspire against that or for that. I'm just recognizing that takes a certain set of skills to be able to do that. And I have a privilege to be able to operate in a private environment. And in that private environment, you think about choices and capital allocation and even an M and a transaction in the role your board plays. The beautiful thing is that you can actually condition and work with your board and I think a broader way in a public environment, they have a governance role and they're observed in that governance role from a public basis. And there's a trust with the shareholders that has to be established and maintained. And again, I think that's a beautiful thing. Not knock, we have all of that. Obviously, as a private company, our board has that same fiduciary responsibility to play the same role, the same degree of oversight around our choices. But in a private organization, it is my perspective that I can actually walk from that to a different place, which is using our board as a thought partner, using them for the guidance and counsel and that incredible level of experience that they have, not just in terms of governing our choices, but shaping our choices, not releasing and ceding the authority vested in me or my leaders and delegated to us to make choices and run the business. That's not giving up management's position. It's not asking your board to play the role of management, but it is asking them to play a role that precedes their decision authority. And it's called thought partnership. How do you engage them in all that wisdom that's there? Because usually boards are full of wisdom. How do you use it to better effect? And it's been one of the things that I've studied, looked at, evaluated in every organization I've been part of and those that I've been privileged to be in front of the board, whether it's periodic or temporary or more permanent, like this role, I really have thought hard about that long about that, come to that conclusion that if underutilized, what a waste. And if utilized what an incredible benefit. So I engage our board in conversations around our allocation of capital long before it's on a PowerPoint slide or in an Excel spreadsheet where we're talking budgets and commitments to budgets and annual plans. And I engage with them around market signals and engage with them about risk and engage with them about the organization's ability to rise to opportunities and engage with them around sizing said opportunities and the capital we could allocate in our choices. Not against ceding the role of management, saying, I can't make a decision, you decide, that'd be a horrible moment. But rather I'd like your thoughts on this. Score it for us at the most critical level, the ones that are really hard, by the way. If you do that, you condition a relationship with your board that's very powerful. They're engaged more in your business, they have more passion and affinity for your choices. And I would argue they're more supportive. And I wouldn't do it like subrogate all of their objectivity. But I have found that it creates more affinity with our choices and strategy. A more robust dialogue about those choices.

As we go forward makes a lot of sense. If you got a board, you're getting the market intelligence for them, you're getting feedback. Those are like a lot of good ways to use a board. So we had capital allocation where you're having the conversations, but it's almost like you're validating some of those things that you're going to think through. Sounds like there's a lot of interesting things. I'm just thinking anything else I'm missing in terms of getting the most value out of a board. I guess the other thing I was curious about, it sounds like too you're almost having these individual conversations with board members as much as just sitting in the broader board meeting.

100% someone said this and there's a study about this or two or seven out there. I'm sure that in the modern era the CEO has become one of the most isolated jobs on the planet. And it's an interesting isolation in that if you had it on a two by two and you talked about isolation in one of the indices and responsibility on the other kind of frames the job of while everyone says, oh, it's great title, it's cool, it's sexy, et cetera, you'd be painting a job that people would be like, wow, why do I want to do that? And so I often think about that degree of isolation and I wonder to myself, how do you revert that? How do you change that, which I think there's plenty of levers to do that. Don't be isolated. If you work in an ecosystem business like us, get out on the road, spend time with your ecosystem partners. Work in a business like ours, that's very talent centric. Get on the road, spend time with your team. If you work in an environment like everyone should be, where their customers at the end of the day, and my job's not sitting in a box in a building and looking at spreadsheets and dashboards and telling people what to do, that's a part of the job and I'm accountable for that part. But I'll tell you, my best days are in the field with clients, listening to what they want, helping our teams to go find the resources to deliver on that. Those are my best days. Take this notion of isolation and just smash it. Just get rid of it. And it's absolutely also true with the board. Why would you wait for the frequency of a board meeting, whether it's monthly or quarterly work? Quarterly. But why would you wait for that? Why would you wait to get in a room with a set of folks and even if they've had the briefing document beforehand, have the dialogue, then why would you only use all of that wisdom and capability once every 90 days? And why would you let their relationship with the organization, their knowledge of what you're doing, why would you let that sort of only be about 1 90th of their time? Why wouldn't you engage more frequently? Why don't you come to them recognizing and respecting their time and their other commitments more often, whether you routinize it or you do it periodically, why wouldn't you engage them and say, I could use your perspective or I wanted to give you an update on something so that it's a more dynamic relationship? Someone could look at what I just said and say, I'm trying to hoodwink my board. No, that's not the case. I believe in transparency to my team, to the market, and ultimately to our shareholders and our board. Why wouldn't I go propagate that every day that I could?

Kevin, can we talk about culture? I know you have to foster your company culture and then you do acquisitions. And how much of that is betting on a culture fit or assessing culture fit versus anticipating the change? Their culture?

Yeah. So I think it's one of the more important things you can do and it's probably one of the least invested in areas of the M and A deal. I think there's some folks out there that have started to use AI as a tool to build like cultural sensing. I think that's a good and interesting marketplace. By the way. I think there's some firms that say they offer cultural diligence. I've never used it, but I think you could go find that. It's an area you got to dig into and you can task some people to do some work around social media footprints and see if you see anything notable. I don't think diligence is ever going to give you the total answer. What is going to give you better than zero? Culture comes down to two dimensions that this can kind of split. One is more diligence in looking backwards, are you seeing something that's just not a fit, not going to work? Are you seeing a modality difference in the way the company operates? Are you seeing a sentiment difference? Are you seeing a company that's got a culture that's no longer vibrant? People are down in the mouth and upset about the organization and don't trust leadership because that's a lot of work for you to take on to go improve it. It's a lot of trust to go build. That diligent side is important. I think from a go forward basis, if you're going to go consummate a deal and transact the go forward piece is equally important. What are you going to do to focus on culture? How are you going to invest the time and the resources to make sure that you're understanding theirs, that you're hearing it from them directly, that you're mapping yours in the same way, so consistent store to store basis. And then how are you talking about how there's great affinity and natural sort of connection in those and where there's differences and where's the positivity in those differences? And I think the CEO plays a really unique role in that. It could be seen as a parlor trick. Kisan, I don't want to make it come across that way, but I would tell you I think the CEO's role in the early days of an integration or a combination if you prefer, is getting in the mosh pit, getting in with the senior leaders, getting in with the people that are influencers in our organization and having the direct dialogue. It might be nothing more complex of having nothing to say about the integration. You don't know, you haven't thought it through, don't think that's a great place to be. But let's take that extreme condition and doing nothing more than answering everyone's questions and concerns. I've actually done that. We Made an acquisition that was very people centric. And the people that have stayed are phenomenal professionals, like truly phenomenal. High degrees of integrity, high degrees of mission orientation, incredible work ethic, beautifully professional in what they do, like amazing people. But when we acquired, there was a lot of uncertainty about all the things that we would do that would be evil. And it was interesting. My favorite comment that came from this, what I'll call pit session, was someone looking at me and saying, I've always worked for a small company, I've never worked for a big company. You guys are a huge company and I'm really worried about what's going to happen. And of course, in my mind, working for a company of our size and scale by 2500 plus people, having come from an organization that my organization, the one that I looked after was 40,000 professionals. So my frame of reference is I work for a small business and I love it. I can see every edge of the property. But from this person's lens, I was a gigantic business and they worked for a small company. Interesting perspective actually matters. But getting in the pit and having that dialogue, you won't know that until you ask the question. You won't know that until you show the courage to stand in there and answer every concern, gripe question, you name it that comes out. Can you solve all of them? No. Are you going to make everyone happy? No. In that particular case example, just by way of reference, we retained over 89% of the performance staff. And I don't define them by that. I define them as great people, individuals, professionals that are part of a company. But if we aggregate them on a spreadsheet, we would call them the performance staff. We kept 89% of them. Our goal was a lot less than that. I was really excited about that. And we did it through one fundamental way. Engage, have the dialogue, address the questions, learn from what they have to say to you. There's power in that. Invest, build relationships, find opportunity, and make what seems to them big look a lot more small. Just like for me, what I'm in looks small compared to where I came from big. It's all just perspective. Work it, change it.

Kevin like pretty early in the deal process, it's a lot of like executive executive conversation. How consistent is that sense of culture from those executive executive conversations to how it expands out when you get to know the broader team? You meet an executive and you're like, wow, this guy's really an asshole. I don't think we're gonna do a deal versus, like you hit it off. And then I'm just kind of curious, like, is that sort of pretty consistent or is it just, whoa. You can get surprised.

You could get surprised. I would be cautious to tell you it's not a one size fits all. And so you're going to find people that are really different. I'm thinking back of the entire sort of repertoire of deals I've been involved in and starting to think about all the archetypes and we don't have enough time to get all there, get all of it in for you. But I will tell you, you're going to find organizations where the CEO thinks his organization is just like he or she is, and they're not. Whether they're the acquirer or the acquiree in a transaction, they're pretty isolated. The team's just telling them what they want to hear. They don't really know what's going on. When you're involved in a transaction like that, it shows up pretty quickly because you get to your point about sensing, is there consistency? You get one layer in and you'll start to realize, okay, there's an issue here. You get two and three layers. And you know, there's an issue where there's just such a grand difference that to me, if I caught that in diligence, I'd run the other direction. I caught that in integration. I'd double down what I was going to do to fix the culture because I would see like a massive risk in that. It's really context specific. There's other places where that senior leader or CEO, he or she is so central to the organization, they're like part of the genetics. The company has literally mirrored everything they've done. They talk in the same way, maybe a little too homogeneous in places like that. You know that what you see is what you get. And those abilities to leverage and scale are awesome. So it's go after it with vigor. It's so context specific. I've seen it all. I've seen a case where I was the advisor in this context. I was helping a really large tech company to do their largest inorganic ad ever. It was a moment of courage for them to really reach out and do something I think market spectacular. The CEO of the acquired company packed his office, put everything in boxes, shipped the boxes to his own and never came back. And this was a deal that went through a long second review in hsr. Review went through an elongated sort of regulatory period. There's the plus out of that that we were able to really plan prospectively in a very diligent and thorough manner. But think about it for a moment. The CEO walked away and never came back. Once the definitive agreement was penned, what signal does that send to the people that have been in his care over all those years? I don't care about you. It's like walking away. It's one of the most horrific things I've ever seen. I'll never forget looking at the COO as we were in that early integration moment. Again, I'm just the advisor in this, trying to help my client. And the COO of this company was the one that was still holding everything together, holding their leadership together, trying to keep the business still running. And after we talked process and timeline and calendar and roles, raised his hand and said, can someone in this room tell me what you want to do with our business? Because my client, despite a lot of cajoling and guidance, hadn't yet put that thesis on the table and said, this is what we see. And thankfully, they had listened to me enough to actually put it on paper as they looked over at me in this room and said, oh, we've got something we'd love to share. And the moment we did, that leadership team, while they stayed on their fiduciary side of the line through that regulatory review and didn't break trust and public confidence around letting us operate their business consistent with the law, really got on board with planning. The combination of the businesses is one of the most successful things I've ever done in an integration basis because the leadership teams leaned in. But, boy, if you had asked me before that watershed moment how it was going to go, I was deeply concerned about that CEO just walking away. It was just horrific. Absolutely horrific.

Yeah. Showstopper. I don't know how to handle that situation, but it sounds like made the best of it. Have you ever convinced someone to sell their business?

Yes.

Teach me how to do that.

So let's go a little more nuanced. They don't want to. And you convince them to. Or they're contemplating it. You convince them that you're right. Because those are two really different questions.

Let's play both out. I'm curious. I feel like people call their cars tight to their chest, so it's hard to tell if they're contemplating it, because a lot of people, I've noticed that in conversations, they warm up to you a little later, then you find out they're contemplating it, where in the beginning they're like, no plans to sell. So there's a little bit of that. I don't even know how you get a read of that first.

I've been at the table to try and do that many times. And if someone is not signaling that they're available for that conversation, that's a warning sign for me. It's not about my prowess or ability to convince them or compel them to do this. It's more around. There's a point where I don't want an unwilling participant on the other side of it. Having been the acquired, by the way. I think the same plays true where I might be an ardent defendant of what we're doing and how we're progressing, our agenda and our strategy and our productivity and our performance. I might love that. And so am I willing to give it up? Maybe not. Is it ego? It shouldn't be. I think you always have to be careful as a leader where too big a dose of ego is in the way. But that being said, if I continue to be stalwart and holding people off, it should give the other side a little bit of a warning sign that you're going to face that over and over. If I open the door and say, look, you're going to have to compel me to do this. It's not just economically, you're going to have to share your vision for what you would do with us together. I've given you a signal that I'm open to it. So there's a line for me, Kisan, where I draw back and say that's as bad a signal in diligence as I've ever seen. So have I done it? Never. When someone's got the Heisman out and pushing back and saying I'm not interested, if it's just resistant, trying to get me to think a little more bravely, courageously pay a little more, I actually admire that in somebody. Now, the flip side, just to explore it. If someone is available and they've made it clear they're open to the conversation, then the answer to your question is 100%. Absolutely. Every day and twice on Tuesday. I actually think the CEO or the senior leader, if it's a business unit leader, plays the quintessential role. Now, I'm not suggesting they should be negotiating on their own, out on their own brazen, like hero moment where they've got it and the other person doesn't. Use your team, operate as team, always better. But if you think that the corp dev leader is going to take your direction and your parameters and go off and do it, I think you're going to be a little bit surprised by the way that can be an incredibly skilled corp dev person. I've been an incredibly skilled M and A advisor where some magazine once said I was at the top three of what I did in the world. Great. That and four bucks. Get your cup of coffee at your favorite coffee store. Not interested in that. But I know where there's real yield and power in a relationship. And I think if the business unit leader or the CEO in certain contexts of a scale deal can come together and say, look, this is what I see and why we should come together. Let's talk about what your business is worth. This is a personal thing. If you're the leader of a business and you're going to lay down your sword or combine your army with someone else's, if you're going to leap forward into that, it's personal. It's a personal choice. There's money involved. Yeah. There's success involved. It's a culmination of something that's all great, but it's a personal activity. It's a personal choice. It's a personal choice wound in with your shareholders. Never forget that. There's a degree of personal in this. You want to be sold something by somebody that it's transactional or do you want it to be a relationship and it to be treated equally as a person? Personal choice. I always think of it as I want to convince them. I want that to come from me. I want to talk about the terms I want to talk about. Every time I've made a pitch like this, I start with principles. This is the way I think about. This is the way I frame my logic for you. This is what we see and what you're doing. It's great. This is how it plugs and does. And then I'll get to what's it worth? So this is what we think about in terms of value. And I'll tell you that choice as a leader, you have to accept that you're going to get told no from time to time. You have to accept you might even make someone angry from time to time. If you're a value buyer to our earlier discussion, you got to accept that you're going to fail from time to time as a leader. I hope you can get comfortable with that. But you also have to accept that when it's the right fit, you're going to find great affinity with that leader across the table or across the zoom call. You're going to find that you'll get to terms that on a broad basis makes sense. The attorneys can get in the room and hammer out all the dotted I's and crossed T's. Do you fundamentally see the world the same way? And when you find someone that's willing to have that dialogue with you, you get to negotiate terms that seem to make sense for both parties. I would say you're on the road to a really successful transaction. A lot of work to be done. Not doing this correlation thing where it's if we can do that in 10 hours, it's a successful deal a year later. That's all wizardry and yes, but are we off to the races in a good way? Hell yes. Sure.

So it's more about working towards a shared vision.

Even if you're a robber baron acquirer. Let's put that out on the table. Keyson. Sometimes you're going to look at an asset, maybe it's a distressed asset. You're going to be a robin bearer acquirer. It's going to happen from time to time even though it matters. Is it a shared vision there? Yeah, it is. Like I'm going to take the asset that's been struggling and I'm going to make it better.

That's. I was curious if there's any like other drivers you'd want to hit on. So I think the shared vision is probably the main thing to lead on. Then obviously there's the price consideration. I'm always thinking of like playing devil's advocate myself here. If I was going to sell the business, if you're giving up a lot of power and control, that's one. And then the financial incentive where I have control and I know the equity growth and things of that sort versus is there sort of a picture on that of hey, there's still opportunity for you to grow that equity with the combined business through options and things like that.

There's a lot of nuance in this too. Any great leader with any title that's ever operated on behalf of their shareholders knows that this is nuanced. Knows that you have to have the conversation with yourself and or your stakeholders minimally around my selling in a down environment. Are we trading down for whatever set of fundamentals or intangibles or externalities that might drive that? Is the world worsening as I'm selling? That's a certain kind of conversation. Is it improving? That's a different kind of conversation. Do we set out on a five year operating plan and a vision that we could realize in five years and we're two and a half years into it? Are we selling early in that cycle? Are we being paid for what we built? Are we being paid for the prospects of the future? Are we being paid for what we can do? Are we being paid for what we in concert with others can do? If I'm selling, those are all the questions that I spend time on with my stakeholders. If I'm buying, I should be thinking about the same things, even though I might use them and articulate them differently. Am I buying at a premium because things are on an upswing and I have price point risk? Am I buying on a downswing and I might have market economic risk? Am I buying early and I got to make sure that not just the price that I pay on the definitive agreements, but the price I need to allocate. Back to your persistent question about capital allocation. Like this is a work in process. If I underserve it at the capital allocation next year at that table and I don't put enough capital into it, great acquisition or final outcome, it's a lot more nuanced.

Yeah, it is. So lead with a shared vision. Then you can figure out their financial terms through all those other considerations.

This is a landscape, as you know better than me with your approach to this market, whole dialogue about M and A science, you know that. This is a landscape that by anyone's measure, anyone's study is tragically littered with failures. Yes, but also highlighted but incredible successes. And it just depends on whose study you want to look at. I did my own that was much more scientific than I think the rudimentary 1/3 succeed, 2 thirds fail crap that's out there all the time. But it is a landscape that's not easy. This is a place where the arduous tasks are tackled by the really courageous and great at what they do. If you're not prepared to go do the hard things, you're not prepared to invest in it, do it the right way. You're not prepared to really deal with all that risk. Don't enter because it's not a risk free environment.

Got to know how much risk you can tolerate that fourth pillar, battle rhythm. Do you put the emphasis on speed? How do you make that happen? Besides war cries to the leadership team.

I think speed always starts with expectations. I'm a believer in the people in an organization. I believe in their goodness, their strength, their resilience, their capability, their expertise, their applied industriousness in what they do and whatever their chosen field is. I think a lot of leaders are afraid to ask of their teams what needs to be done. So I think it's all about clear expectations first and Foremost next, it's about logic. Create the imperative. Why does the speed matter? Let's talk about what we have to get done. And then I think it's third, about incentives. If you're going to ask your organization to go faster, which means it's going to do more, make sure you're willing to show up when it's payday and make sure they participate appropriately. And paint the vision for that not only in the near term in terms of whatever you might do for those that are doing a day job and a nights and weekends job to make this work, but also long term. Really always come back to painting the picture around. When we put these pieces together or this string of pearls together in a series of acquisitions, this is where we will sit. This is why we're doing it. It's not about the CEO and the glory of being an acquirer. It's not about the CEO and them standing in front of the board and saying, look at what a phenomenal leader I am, he or she. It's interesting, it's not compelling. It's about the organization creating more opportunity, creating growth, creating economic difference, which then means the organization can reinvest in itself and reinvest in its people. As it does that and continues to grow, it creates opportunity for more leadership. Leadership means progression, promotion, advancement. This is what we miss sometimes in a societal sense is that it's not and never should be seen as an easy game. Growth is hard to do. Inorganic growth has even more risk to it. My opinion. But absent that, can we ultimately serve the market that we choose to serve? In a way we choose to serve it. And can we serve our people, which is a gateway to serving our communities in a way that we choose to serve them? There's more bias to the former than the latter. And that covenant with your employees is broken. That objective covenant with them around growth creates prosperity. Prosperity isn't just about our shareholders. It's about you too. I'll never run for president in this country and I'll never be a senator or congressman or a mayor or governor. But I would tell you that to me is one of the passion things for me is have that conversation with those that you look after as a leader, create that covenant around we together have to do great things which serves all, including the customers and the communities in which we sit. We've failed to do that lately. We've failed to have that objective conversation. We've created entitlement in place of it, which I think is a very dangerous thing versus a merit based system. And as leaders, I think it's incumbent on all of us to actually get back to that fundamental place of having that open conversation. Creating the connectivity between performance begets reward and reward begets growth. And it's a really positive, upwardly motivated cycle. That's where you want to get your organization. Whether you start at that, whether you have to really turn an organization around, whether you started with that as a great sort of tailwind. Either way, that's where we have to get back to. Inorganic growth is just one element of that.

All about setting expectations. This is only the first question of the outline. I know. I think we pad a little extra time. I was thinking there's a few questions that might be interesting to ask. I know you had the common challenges. You sort of mentioned about how the playbooks could be misleading. So maybe talk about like the bad and good, you know, what are the challenges and what are best practices?

I'm going to nerd out on you, if that's okay, and go a little bit to the science of M and A.

Sure.

I've been a practicing professional and now a consumer of practicing professionals in the space for a long time. And I believe, like all markets, there's a science to the market, there's a logic to the market, there's an order to the market. And the real trick is finding what it was. And I used to be really frustrated with my legacy organization where we would go out and talk to clients about we're going to help you be successful. And they would ask, okay, what are my chances? And we would throw out one third or successful. Two thirds are failures. And then logical ones would ask, how many have you served that have been in the 1/3? We could answer that question, by the way. I was always frustrated with that. So I actually embarked on a study. I looked at 2,500 organizations that were an end that was sufficient to be statistically relevant. I looked at size. We wanted larger companies, by general definition and cutting off the tail, if you will, to just get the things that were material. And we looked at them from an acquisition basis and said, how effective have they been? And you could look at a lot of different ways to assess that. The one that people proffered up that we should look at is what's their share price a year later? And I was really bothered by that because there's so much extraneous in that. Who knows what's in that number? So I didn't buy that. I actually asked us to look at operating fundamentals. So what happened in terms of the Base case to the post effect case. Whether they were a single acquisition or a serial acquirer, did we see changes in their operating fundamentals? So did net income change? Did cash flow change? Did days receivables change? Did headcount change? Let's get down to the fundamentals. And we created an index off of that set of fundamentals and we stack ranked them in four quartiles. They weren't perfectly aligned by quartile, but directionally that was our frame of reference. And you won't be surprised that the quartiles were a more difficult landscape, a worse landscape than that 1/3, 2/3 were successful. In fact, it was about 11% that were successful at the top and it was about 38% that were horrifically failures at the bottom. The second quartile was roughly in the low to mid 20 percentile, but on a non risk adjusted basis. So no cost of capital implied. We're effectively flat. Nothing changed. So it told me that it's not 1/3 that are successful, it's about 11 or 12% that are successful. Now here's the epilogue of that. At 11 to 12% were wickedly successful. They were, as my earlier comment, robber barons created tons of economic value, the fundamentals moved substantially, but everyone else was a failure. Now is that interesting? No, not for me, because I wanted to get down to what drove the difference. I wanted to get past correlation and get the causality. We actually took the top quartile and the bottom quartile. And to the degree we could get to the data, whether it was through interview or through public insight, we actually compared the practices of the top versus the bottom because that should give you some really interesting insight. And look, there's a lot of things that make an integration successful. I'm not going to try and stand here and prophesize that it's two things or three things or five things or 10 things. There's 10,000 variables in a deal from the point of inception and origination to that last ounce of integration matter. And everyone should appreciate that. It's about executing that entire continuum with those ten more thousand variables in play and doing it incredibly good. That's how success happens. But five themes emerged keyson that I thought were really powerful and we've hit up on many of them today. Those five were as follows. The first was the really successful acquirers did have an integration thesis. That thesis co traveled with the deal. It was loose and rudimentary up front, but it was a vision and it got more and more detailed as the Deal was prosecuted and as they headed into integration planning and eventually it exited as a true detailed integration plan upon which to execute. So that's 1, 2. A lot of the successful buyers didn't look at integration in a historic sense through the lens of functions. Not saying functions aren't important. You've got to have a great finance team, a great IT connectivity, a great talent and HR team, all that matters. But they looked at it through a go to market lens first. What's the client experience we're trying to deliver? Who's the customers that we're trying to engender? What's the value proposition we're going to take there? What's the brand statement we're going to make? So a serious go to market bent on everything that they did. Now the regulators and the attorneys are going to hit the brakes right now and say wait a second Kevin, if it's under regulatory review, what can you and can't you do? But there are very effective mechanisms in the world today with clean rooms that can be done in anticipation of a deal and leading right up to it to allow you to continue to push that client facing side very far down the field and open it at the right point utilizing things like deal desks, et cetera at that point of deal consummation. But the really successful made it less about functional integration. They almost presumed that they would get that done right and did. But they made it about go to market more important. Third, while all the buzz out there today is about AI and next gen AI, AI has been with us since the mid-1960s by the way. I laugh a little bit at this notion of AI is new. It's not. Sorry folks, we are still however, all that being said, not really around a people less organization. So organizations are people centric, some more so than others, but they are all people centric to a degree. The truly great understood this. Where they had a client experience, they also had a people experience or talent experience. They thought about what the day looked like for that first day from an integration basis. They thought about the uncertainty, they thought about the messaging. It wasn't just communications. To be clear, they didn't just throw it over the transmit the comms team and say tell people a bunch of stuff. They made it personal. They defined what they wanted to land in terms of the experience. They talked about what would happen with benefits over time. They talked about pay philosophy. They they made the talent experience. A central theme to this fourth was culture. We've talked about it a bunch. Kisan. I have told you it's one of the four essential jobs of the CEO. But the entire leadership team got invested in the process and demonstrated the culture and found the bridges from company to company B and built a new one together. And then the fifth was value. If you want to think about value, we talked about this early on. Synergies and synergy capture the truly great got after getting the value fast. So it's both a combination of value as well as battle rhythm. They got after this fast. They didn't wait, they didn't defer. They went and made the hard choices early on. They didn't languish. Those five themes showed up in the successful 11 to 12% over and over again. And they were completely and utterly absent in the bottom quartile. That was again, horrific to look at in terms of shareholder value destruction. So is it the right five things to focus on? I don't know. Are there 10,000 other variables to think of? Of course there are. But when I enter any deal, I think about these five based on that scientific study and based on 38 years of experience, that these five things matter a great deal. Get these right and you're set up for a better possibility of success than you are absent. That much I know to be true.

I think you nailed it, Kevin. So we got one, the investment thesis. Two. The go to market. Three. The people experience coming in. Four. Culture. Five, value and speed.

Value and speed right together.

Value and speed.

And by the way, like people sometimes say, Kevin, you mean like the talent experience and culture are different? They're absolutely different. Talent experience is like, what's the annual review process? What's your compensation philosophy? How do you deal with promotions? Where do I go find help if I'm having a challenge with my benefits provider? That's the talent experience. Culture is something a little more amorphous but equally if not more important and powerful.

Great summarization, Kevin. What's the craziest thing you see in M and A?

You don't have enough time, my friend. You don't have enough time. I've seen everything from CEOs that have walked away to CEOs that have sort of argued openly against the deal even after it's been consummated and you're in that integration planning to private equity investors that have asked me as an Advisor. I've got two CEOs. Who should I pick and why? I would never sort of delegate that choice to an outside advisor. So I think that's crazy in and of itself. So look, M and A by definition is A nonlinear experience. So you're going to see everything. It's crazy. I'll tell you less the crazier, craziest thing I've seen and I'll put it to more of the most tragic thing I've seen, which is to be successful in this space, to be to the terms of science in this space. Success comes with logic and success comes with using that logic to inform your choices. And I think there's times when small companies, all the way up to big companies let emotion come into this. And look, there's always going to be a degree of emotion. I've said this is personal. Not discounting that. I'm not also suggesting that people should be robots and autotrons in this where they don't care about things. But when you go past that notional line of that passion and it's personal to something where it becomes about ego, especially at the top, and people feel like they're in a win loss situation as opposed to what's the benefit of these two things together? That's the most tragic thing I've seen. Because logic, if it allowed the full light of day, will generally paint to a pretty good choice. And that pretty good choice generally benefits a lot of people, especially those senior leaders that might be frail or fragile in that moment of ego, but they lose their way from time to time.

Yeah, emotions are powerful in M and A. Kevin, this has been a great conversation. I learned so much. You've helped me become a much better M and A scientist today.

I think I gave you the ruminations of a boy that grew up on a small farm that's traveled the world for 38 professional years, has done a lot, seen a lot, experienced a lot, and had a lot of fun and seen a lot of things that have worked well and that didn't. And if we can put science to that, as a rapper with all the analytics and all the experiential pieces, then I hope I informed others. But it's been great. Kisan, thank you for having me.

My pleasure. Those of you still tuned in, fellow M and A scientists, thank you for sticking through. Feel free to reach out to me on LinkedIn. Always open to suggestions. Any other suggested speakers topics. 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 podcast. 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 M and 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.