Transforming Existing Staff into M&A Experts

People are asking for more M and A Science, so we're giving it to you. We're increasing our production from once a week to twice a week. Look out for more M and A Science interviews this is a conversation with Birgita Elverson. She was the former Global Head of M and A Home Care and Health and well being at Unilever, and in this interview we talk about her experience there building an M and A team from within. We discussed how they formulated their M and A strategy, the challenges they faced during their first acquisition, how they scaled their M and A team, and their smart approach to integrating companies. Hope you enjoy this conversation. This episode is sponsored by Deal Room. Meet Yvonne, CFO at fastlap and a 15 year MA veteran. In the chaos of data integrity challenges, Yvonne discovered his sanctuary Deal Room. Why? Because it aligns perfectly with their needs project management, secure repository and a single source of truth. Well, let's shift gears and hear it directly from Ivan.

Just sign up for the room. Super excited about it. It's one source of truth. That's what we're trying to solve it. All data in the same place. We can all access it and get to it and be able to see where we stand at that particular date.

Join Ivan make your MNA journey a success story with Deal Room, the only end to end M and A lifecycle management platform. Learn more@dealroom.net Again, that's dealroom.net 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 or 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 the products and services we develop to support world class M and A teams or want to get involved with our community of forward thinking M and a practitioners, visit mascience.com you can get started by subscribing to our free weekly newsletter for latest insights and events. Again, that's mascience.com hi, this is Kisan Patel, CEO and Founder of M and A Science. Joining me today is Birgita Elverson, recent Global Head of M and A Home Care and Health and Wellbeing at Unilever. Today she's an investor, advisor and Board member. Today we're going to talk about the process of building an M and A team from within the company and what are the advantages of recruiting internal resources rather than hiring from outside the organization? Brigitte, how are you doing today?

I'm doing very well, thank you. How are you?

I'm excited on 10. Thanks for making this happen. We're here live in Verbier, Switzerland, which first time in Switzerland and this seems like such a cozy but friendly skied village. Tell me about it. You live here?

Yeah, we live here. It's actually by accident because we came for a winter and we fell in love with it. So we decided to move the whole family from Singapore to here. So now the kids go to school. They can literally take the the skis to school every day. So it's amazing. It's a little bit of a gem, to be honest. A hidden gem. It's not a huge place with loads of hotels and stuff like that, but people who are here, they tend to come back every year and it's got amazing off piste and itineraries that you can take around the mountains. Yeah, it is a little bit of a hidden gem. It's a bit like the Telluride of Europe.

So you gave up the all day free saunas in Singapore where you definitely get the good tropical weather. I take it you ski?

Yes, I ski. I ski a lot, but I'm actually the worst one in the family. Even my 8 year old is better than me. Now. That's an okay competition to lose.

You have to be good out here. I've seen the slopes are pretty steep. It's not a bunch of beginner slopes around here at all.

Exactly. There are a few, but some of them are hidden. You need a guide to find them. And yeah, people are serious about their skiing here. I tell you, I thought I was good, but here I'm lucky if I'm in the top half of the people who are here.

I appreciate you getting the invitation and getting me out here.

Thank you for coming. Thank you for taking the leap and going all the way up in the mountains. I was actually a bit surprised, pleasantly surprised that you went ahead and did it.

Oh yeah, I would. Why not jump in a chance to do an interview here in the mountains in Switzerland? Absolutely.

Thank you for coming and thank you for bringing the beautiful weather. It's been amazing ever since you got here.

Hey, just a sidebar. It's a really funny backstory. We did the interview last year. One time we actually lost the files through a little, I don't know what you call it, mistake, but it turned into a better opportunity. Now we get to do this with some real broadcast Equipment. So thanks for making it happen. I really appreciate it. Can we just kick things off with a bit about your background?

I'm Swedish. I've lived in different places around the world, and now we've landed here in Switzerland in the mountains. I'm a mathematician. I got a Master of Science in Applied Mathematics. And I have spent roughly a decade as a management consultant with McKinsey and a decade with Unilever, where I did a bunch of different things. One of them was building up a new division that we're going to talk about. And now I'm working supporting companies in different ways as an investor and advisor and board member.

That's awesome. That's a really interesting background. Do any of the things that you've learned from the mathematics background apply? Maybe an M and A, for example?

I think all the time. The good thing about mathematics is that you get to be really good at learning new things, approaching problems that might seem a little bit big to begin with, and you learn how to take them on and basically address them one piece at a time. And in the end, you've got something together. And it also gives you a pretty good feel for what's big and what's small and what's wrong and what's right. And when you see numbers, it's a good capability to have to quickly see when something is off and then you start digging, and that usually leads to insight.

Interesting. It sounds like it goes beyond just looking at financial numbers, almost like looking at other pieces of the deal. With that same mindset.

Yeah, absolutely. I think so. A lot of mathematicians tend to be curious, and I think that's a good quality to have when you're looking at M and A and you're trying to understand the type of companies that you are addressing and looking to acquire.

Got into management consulting, was that where you got early M and A experience, or did that come later?

I did strategy operations in M and a with McKinsey, and I got the chance to view it from the advisor side, Got the chance to work with private equity, look at a lot of different companies in different industries, and that was helpful in terms of understanding that there are more than one business model out there, so many different business models and so many different industries that work in different ways. What might be your correct gut feel in one industry is completely wrong in another one. I learned that the hard way at McKinsey, and it was very useful. I brought with me a bunch of tools that I've been using a bunch of times since then.

That's actually A really good point. Do you have an example of something like that that you sort of learned in one industry and found out totally is not related in a different industry?

Most people that are well educated in business and finance, they have an underlying framework which is actually based on Ford, if I'm very honest. And it is your sort of functional organization and your value chain which is very much built on a manufacturing industry. And it works pretty well in manufacturing industries. But if you look across to for example, high end software development, another area that I'm working in the business model is completely different functions are not as important. Instead it's about three core processes. Recruitment, sales and delivery. The sort of marketing, sales, supply chain. All of those functions, they don't really matter in a people heavy industry like software development, consulting services. Really?

Yeah. That's really interesting. So like a lot of those big dynamics change and you need to you learn it as you go into different industries. You got into Lunilever, I was brought.

In actually to be an internal consultant. There was a team called Strategy and Operations doing business model transformations around the world. So I had a team where I had three, four different teams that went to different countries and they supported specifically the home care business and doing end to end business model transformation. I mean, Unilever is a manufacturing company in that sense. You got the typical manufacturing value chain and you got the functions. And one of the key things there was that the functions were very strong. But when you looked at an end to end business like laundry products, so detergents and stuff in Brazil, there was really only one person that had an end to end responsibility. And that was the chairperson of all the business Unilever had in the country. That obviously led to a bunch of sub optimizations along the way. So what we did was that we clarified a business model that was the most optimal for that type of business. In this case detergents. And then we worked with each of the functions so that they all optimized towards the same goal. And that was a big win.

Wow, that's where you first started?

That's where I first started. It led me into innovation actually because there were very few people in Unilever who would look at things end to end. And there was a need for an end to end project leader in a very disruptive innovation project. So I was brought in to do that and I got hooked up and I got all these ideas about how to improve and change innovation in Unilever. And I tried to make it happen. I realized that there was nobody who really owned Innovation, all aspects of it. And at the same time there was a person who was going to lead a transformation of the whole company and the big reorganization. I felt like I should talk to him. I brought my ideas to him and he was courageous enough to let me in. I got into his team and then he and I worked together on an innovation transformation. Having done that, we said, look, we should really try to grow this company and started looking for growth areas. So after the innovation transformation, we were looking for new growth opportunities. We found the area of health and well being, which is really consumer health vitamins. We thought it was extremely interesting. So we wrote up a strategy. I went ahead and implemented that strategy and built up a new business unit.

Tell me more about how do you shape a strategy? And then I'm trying to get to is like how do you look at something from organic versus inorganic?

We saw that health and wellbeing as we called it, really the supplement space was very interesting and it went through big changes. So it was a good opportunity for a new entrant to come in. Now, when you look at whether you want to do this organically or through M and A, what really was the winner here was business models. The companies that took a disproportionate share of the growth in the supplement space when these big changes were happening, they had a very different business model from Unilever. We could still see synergies in capabilities in the supply chain, other things and the road to market, lots of synergies. So we could see that Unilever would be a very good owner of these businesses. But we also saw that Unilever would be probably not be a very good developer of these businesses because the Unilever business model was not the one that was winning in this space. The one that was winning in this space actually took a whole lot of Unilever typical ways of working and turned it on its head and it worked really well. So we could never find out ourselves how to really make it happen. But we did see that there was a bunch of companies in a nice sweet spot. They were focused, they had grown a lot. They were not super early stage, so they were a bit lower risk, but they were at an inflection point where we could add a lot of value as a new owner. That's when we developed a buy and build strategy.

Basically you looked at the space and that you're pretty far behind if you're going to get in there and start really getting some meaningful traction. And then also the way of working seemed like it was Pretty different than what was actually being really successful in that space.

Yeah, absolutely.

And then started shaping, build and buy. What did that entail? Like, when you start developing a strategy, what are the key elements that you're covering and like, level of detail.

We needed to figure out what companies would be good participants in a platform. Would you buy a platform or would you build a platform? That's one key choice. So when we looked at this space, we saw that most platforms that existed, they had some really interesting elements, but also some elements that we really didn't want that were legacy businesses that people put in there, frankly, because they needed a little bit more scale. We decided that instead of doing that, we went ahead and built our own platform with a number of players that were of roughly equal size and that could enter on their own terms. We needed to find them at the space where we could really add value and they were still big enough to stand on their own two feet. Because we didn't acquire brands, we acquired businesses, including their business model. And then we also needed to find out why should we own these businesses? Why are we a better owner than anyone else? And that comes to synergies and how to capture the synergies. And we realized that since we want them to maintain their current business models, we can't do a hard integration. But also we're not a financial owner that could just be completely hands off. Then we're not going to be a better owner than anybody else. We see a bunch of synergies both between the businesses and with ourselves. So we discovered, or we developed a method that we called Collaboration for the future, which was more around finding specific areas for collaboration and synergies that were not a cookie cutter approach where it was a one size fits all. It was rather that we saw three of the businesses might have similar customers, then it makes sense to collaborate on route to market. Two other companies have very similar product formats. Then it makes sense to collaborate on supply chain and especially manufacturing. And then you look at the ingredients where a number of the businesses also have overlaps, but not all of them. And that leads to different synergy areas in different constellations. Rather than trying to force fit everyone into the same model.

I want to step back. I'm assuming that there's a process where you build out a strategy.

Yeah, we developed the strategy and we got the blessing essentially to continue. As luck has it, just a couple of months later, there was a business that we were very interested in that said they wanted to start a process and they wondered if we wanted to be Part of it. So we kick started the business by acquiring Ollie, which was the first business in our portfolio. And it built from there. And now a couple of years later, we had half a dozen businesses in the portfolio and the model worked. The organic growth was fast enough so it quickly turned into a proper business, actually.

Okay. The level of detail is really interesting because I'm always curious about that because obviously the large company work different. Does it come off with a short. Here's a little three to five pages of what we're trying to do. But it sounded like you had things mapped out. You really had a pretty well thought out strategy in terms of identifying these companies, how they would come together, what that would look like in terms of building a business unit through acquisitions and then you wouldn't execute it. Love to hear a little bit about the timeframe in terms of when you started doing that first acquisition. And were there some surprises or challenges that you had when you started executing?

We went ahead pretty fast. We had a long list of 1600 companies in our database or something like that. And it was one that we felt ticked all the boxes. We called it a wave two consumer goods ification company within health. And that was Ali. And we got along really well with the founder and kept working with him for a long time. Of course, there was a lot of things we learned when the process started. We were three people in the company that had worked on this strategy development. We just had to be very innovative in terms of teaming up and making it happen. So we built what we call the coalition of the willing within the company. We actually found a lot of colleagues and bear in mind, Unilever has 150,000 or so employees around the world. And a lot of them turned out were very interested in this health and wellbeing space. So we managed to pull in basically the whole due diligence team on virtually no heads up at all. And we brought them in and we evaluated the company. We brought in external support as well, which was both very helpful, but it also built a lot of confidence in the organization that the findings from the due diligence we did, they were very solid because this was a new space. We had done a little bit one or two toes in the water in Italy before, but this was a whole different thing in terms of acquiring a business in a new space. We had to learn as we went along. So during that due diligence time, we pretty much built up the organizational model around this new business unit. How we were going to run M and A, are we going to Tie it together with strategy and with integration, what kind of governance model we were going to have. And I think the biggest surprise in all of this was how amazing colleagues around the world we had in this area, that they had expertise in this area that Unilever was actually not present in before we started this work. But it was based on interest or prior experiences and they were so willing to chip in. So it was actually a really interesting journey.

Sounds like you started with a really small, lean team. And things grew as needs came. It sounds like you found a lot of internal folks. Why the pursuit over internal versus external.

To start with, when I wanted to build up my organization and my team that were going to do this because we wanted to do M and A properly, we wanted not just look at individual targets. That's a little bit how it started. But part of the strategy was to run programmatic M and A. And then M and A is a capability rather than just a one off event. We needed proper team to run this. When you look at the requirements for the people on this team, there were pretty much three main areas that we needed. One area was that we needed people who could lead M and A end to end, from strategy development all the way through to integration. Not just the due diligence and the transaction itself. But the second thing was we needed people that had a deep area of expertise. And the reason for this is a little bit philosophical. I believe that if you want to credibly lead a project, you should also be able to lead a work stream within that project. And then you need this deep area of expertise. The end to end M and A leadership and the deep area of expertise, they also together form this T shaped profile that I think is very useful for these type of roles. And then the third thing that we needed was somebody who could productively network with the rest of the unilever organization. The 150,000 colleagues out there that could contribute local market knowledge. They could contribute knowledge about specific customers and routes to market, about the supply chain, also about regulatory R and D, loads of different areas. And when you look at those three areas that we needed and you set a time frame to each of them, because the perfect candidate rarely exists, it was very difficult to find anyone who could do all three of these or had all three of these coming in. So if you look at how long it's going to take to build them up, the longest is probably the expertise area. If you want to be an expert in something, you probably should work on it for 10 years. So we decided that we Needed people who had a spike somewhere already. The second longest is probably to build a productive network. So I came in as a mid career recruit into Unilever and I learned that for me it took around three years before I could productively work with the organization and really get the best out of the organization. And then if you do it well, learning how to run M and A end to end, it's more like a 6 to 12 month process. So when we couldn't find people who could do all three, we went for people who had the second and the third. So we went for people within Unilever who had the network, who could leverage the organization and who had a deep expertise within something. And then we built the program to teach them. The first one, which was the M.

And A side, you didn't jump out and try to recruit your former McKinsey colleagues or investment bankers. You saw that you wanted to have this end to end process so that integration was a big part of it. You also saw that you wanted people that can essentially lead a work stream and then also be able to leverage the massive amount of internal resources which has led you to ultimately pursue internal over external. Does that sound right?

Yeah, that's absolutely how we did it.

And then when you did need the help for external, maybe you can break that down too, because I'm curious about the timeline. You started with this core team of just three people. Can you give me an idea of what their roles and capabilities were? And then as you started pursuing your first deal, who got added next?

The three people? It was me. It was my boss who was part of the Unilever global leadership team. So he was spending part time on this super exciting project that we did together. And then there was a lady who was more like an analyst and who was an expert on route to market. So when we ran our first due diligence, really for Ollie, I was the project leader and I was leading a few of the work streams as well. She was leading a work stream, the route to market expert. And we had a bunch of colleagues that we pulled in that all had other day jobs to work on the rest of the work streams. And then we teamed up with an external partner to support us across the board. So they would inject their own people in different work streams depending on where we were weaker or stronger. And then I started hiring project leaders. They were not project leaders when they came in, but they came in and in their first project they would support a work stream. Some of them would come in as a part time support and Then they liked it so much, so they decided to join the team properly in the next project or in the next due diligence. They were ready to lead a work stream. And after that they could support on leading the overall project end to end, followed by leading more independently. And then finally, when they had learned a lot about this, they would start coaching others as well. So I added these new project leaders one by one, and they were coming in piece by piece, just like that. First you join in a work stream, then you lead a work stream, and then you grow from there. So in the end, I had half a dozen project leaders at different stages of development.

That's interesting. We had a whole program just to give people experience. The thing I was thinking about when you're talking through that was a lot of these folks must have been first time doing M and A, which I feel like is always a big challenge when you're growing an M and A team. You want to leverage the internal resources, but then you find that you don't get a lot of actual M and A experience and then you end up with some tough lessons learned because of that. And was that a challenge and did that lead to bringing in some of the external on the early deals?

It was a challenge, but there were ways to overcome it. One of the key things that we did was that I was really looking for people to have the right mindset. I needed to have people on the team that were humbly disrespectful. That means essentially that you've got to be humble. Maybe we should let in the dogs.

Yeah, we can do that. When you're identifying the right people, how do you do it? Everybody's got their own knack in terms of how you recruit people. How do you make sure you got the right skills and somebody's going to fit in? And especially like mentioned before, like, people don't have M and A experience. How do you manage that?

We had a couple of different sources for the people we recruited. One was that we would post roles internally. We posted them externally as well. We did at least one external hire, but the rest were internal. We also used the projects to both get support and help from the rest of the organization, but also for people to get a flavor of what it's like to work on M and A. So we had a couple of different sources for recruitment. One was we would post job openings, but we would also bring in people into projects and they get a flavor for what it was like to work on M and A. Some of them were very keen to Continue. And some of them we were very keen to take in and develop as project leaders. I did a lot of interviewing in McKinsey. I was looking for similar profiles, if I'm very honest. I was looking for leadership, I was looking for problem solving and I was looking for drive. But also I was looking for a specific profile that were humbly disrespectful. And what I mean by that is these people were going to work with both target companies that they didn't know very well. They needed to be very curious, very humble in terms of understanding what made these companies tick and what was the success, secret sauce, so to speak. But also they needed to be disrespectful in the sense that they couldn't just take everything at face value. They needed to be comfortable, challenging things that didn't make sense or drilling deeper if there was something that they didn't understand, or questioning stuff that were just old truths and not really valid. So I was looking for these humbly disrespectful people, and they turn out often also to be the best ones to really work productively in a network and get the most out of a broad range of people.

I like that. Humbly disrespectful. You don't want just humble. You don't want just disrespectful.

Yes, exactly. If you have one of them, it's not 50% there. It's pretty difficult.

Do you have a test or anything that really gives you that, Ah, I found that person.

I would do normal interviews, but actually I had a case that would run with everyone and it told me a lot of things, not just about problem solving, but also about collaboration and style and how do you face situations where you don't have the answer. So it told me so much about people's personalities as well, and it was really useful. So I was running it with everyone I was hiring for that team.

Can you give me an idea what that case involved?

The case had nothing to do with M and A, to be honest. And it was a very simple question. It was, are there two dogs in the world that have the same number of hairs in their fur? Yes or no. And why?

That's funny. So what kind of answers do you get?

All sorts of answers. I think out of everyone that I've interviewed, maybe one or two kind of get it, and they really answer right away. And those are actually not the most interesting interviews. The most interesting ones are when you realize that people are like, gosh, how am I going to approach this? And then you Take them on a journey and figure out how many dogs are there in the world, what type of dogs, and how many hair can there be in the fur. And then you walk through that together and you give little hints. And the best interviews is when somebody has absolutely no clue at the start, but they're willing to sort of go out on this journey and just listen in to the kind of advice or tips that I'm giving them along the way. And then they finally get it and they're like, I really like this case. You know, that is such an interesting.

Can we role play this out?

Yeah. Okay, so the question is, if you imagine all the dogs in the world, and if you could hypothetically take them all and count the number of hairs that they have in their fur at one specific point in time, would you then be able to find two dogs that have the same number of hairs, or would they all have their unique number?

They don't have their unique number.

Why is that?

Because the probability is very, very low, given that there's so many millions of dogs and they all have, let's say, 5 million plus strands of hair.

So let's look at those numbers. So how many dogs do you think there are in the world?

50 million.

50 million dogs? Yeah. And how many hairs do you think a dog can have on its body?

10 million.

So if you as a human being have roughly 50 to 100,000 hairs on your head, how many hairs do you think a dog can have?

10 million.

What's the surface area of a dog versus a person's head, would you say?

Varies by the size of the dog?

Yeah.

I'm not getting this job, am I?

No, you're doing fine. You're doing fine. Do you think a dog can be like thousand times a person's head?

No.

Or a hundred times the person's head?

Probably a hundred. We got a range. 10 times between 10 and 100.

Yeah. Okay. If it is somewhere in that range, say you got 50 people's heads on one dog, on average, about two and.

A half million hairs.

Yeah. So let's say you have two and a half million hairs on a dog and you got 50 million dogs in the world, can they all have their unique number of hairs then?

They can. And there's potentially a probability they have the same number of hairs.

You don't have to find the dogs that have the same number of hairs. But if you have 50 million dogs and you have, say, two and a half million hairs on a dog, and then you take the dogs and you sort them and you say, this is the dog with one hair, the dog with two hairs, three hairs, and you just put them side by side. And then you get to two and a half million dogs. And then you continue. Then you get to 3 million dogs and to 4 million dogs.

You're probably going to hit the probability.

That you're probably going to hit the ceiling. Are you?

Yeah.

So would you find two dogs that have the same number of hairs? Yes, probably, or. Absolutely.

Absolutely.

Yeah, that's right.

All right.

It's called the pigeonhole principle, actually. It's a mathematical principle. If you have more pigeons, then you have pigeonholes, then some of the pigeons will need to share.

I didn't get this job.

I think you did well.

Yeah. But I know how you're going to close it. You'll be like, thanks for the time. It was nice to meet you.

No, no, no. It's all about how to problem solve in a collaborative way. I see people getting really stuck because they've got something in their head and they don't want to question it.

But you're looking for how they explain it, too. You dug into that. Okay, how'd you get to that? And that gives you a sense of how they're thinking about it. When do you get the disrespect part out of that?

Yeah, you do get a lot of the humbleness part out of it. The disrespect. You're not going to get it 100% here. Maybe when I say something like, how many hairs is there on a dog? You're going to see if people have their own views. I could just say a number. In some cases, I would say a number, but you can see if people take it at face value or if they actually think it through and they go, okay, you gave me this. I can understand where it comes from. If they can't, they're actually going to ask about it. That gives you a good hint about the disrespect part, actually.

Fair enough. I like this. I'm going to have to try this one. Hopefully nobody listening comes interviewing for a job at our company. Well, they got a head start if they do the early deals. You used utilizing a consultant, was it McKinsey?

I don't know how confidential these kind of things are, but we used some of the big consultancies.

Okay, fair. And that's not what I'm trying to get to. What I wanted to know is, obviously you found some gaps and thought, hey, let's use a consulting firm to fill this in. Early deals. We Want some confidence in what we're doing. And obviously a bit of CYA there. How do you work with a consulting firm to make sure you're really getting the most value out of it? I asked because a lot of clients I've worked with where they look back and they've had a lot of negative stories about not getting the ROI or value and working with the consulting firm and things like that. But you've been on both sides. You've been in the consulting firm, you've hired them. You got to give me some ideas on how to make sure that you're going to get the right value in hiring an external firm, especially a big one, because we know they don't come cheap.

Yeah, no, they don't. And it's so interesting. But what's important to remember is that it's a people business. The firm's name will give you quality assurance, but the people that are on the project are the ones that are actually going to deliver. The person on top in their team is going to have a huge influence in terms of how much you can get out of the firm that you're hiring. Somebody who's really influential in their organization is going to be able to get all the best experts onboard your team. So that actually plays a very big role. If you look at the big management consultancies, you're rarely going to get a poor output. But if you really want the best of the best, you got to make sure that the person in charge of your project is important for them and they are important for their firm. That's how you're going to get the most out of it.

I like this. How do I do that? Everybody talks a big game, but how do you can you validate that this person is super well networked in their organization? And right away I'm thinking tenure. How long have they been in that organization for? Because if they're brand new, they probably are still in that early phase. They've got to prove themselves versus somebody who's been there 10, 20 years. How do you look at that?

Tenure actually matters. You might have a more hungry person who has a lower tenure. But if you want some leverage inside their organization, you want higher tenure. So you want somebody with high tenure who actually thinks your account is really important, but also their informal standing is really important because there are people with high tenure who maybe are not great at getting the most out of their organization. So hopefully some people inside the firms and you can basically check who is this guy or girl and what is their reputation? And what do they get out of it? So you do your own due diligence of that person. That's one thing. The other thing is ahead of a project you probably set up expert calls and you can tell by the number of experts that they get on board how flexible they are to your schedule. If I'm very honest, and how well prepared they are when you talk to them, that's going to tell you a lot about how important your top person is and how hard they worked to get the best of the best, to join your call, to convince you. Now. Also got to make sure that this is not just a sales pitch because it's common that you get people pitching for a project that are actually not going to be so involved later on. What you also want to do is make sure that the ones that impress you the most are going to be most crucial for a project. You have to get a commitment about their commitment to the project so that you don't just get all the fantastic experts for pitching the project and then when it's delivery time, all of a sudden they got other sales pitches to do. Because that can also happen.

Yeah, people are just biz dev focused.

Yeah. What you got to remember is that it's a people business on both sides and that means that if you're nice to work with, people are going to do a better job. I'm an ex consultant and ex consultants come in different shapes of form and forms. One type of ex consultants are the ones that want to push as much as possible to get the most out of the consultants that they hire later on. And they do stuff like they move the final presentation from a Friday to the Monday and they add a couple of additional questions to look into and then you know that the team is going to work all weekend just to finish it off. That's a short sighted approach, I would say. You're not going to be a very popular client. You're not going to get the best people on the project and you're not going to get the best output. You should be tough to work with, or you know, I wouldn't say tough, but if you've been promised something, you should make sure that you get it. You shouldn't be a pushover. But at the same time it's just like having colleagues in a regular organization. If nobody likes to work with you, nobody likes to work with you. You're not going to get the best. If you're a great person to work with, if your company is a great company to work with, you going to get A better result also from external consultants.

Good advice. When you do retain that firm, how do you set them up for success? We talked about one of the advantages of internal folks is they got all access to information and resources. Working at this external firm, they're going to have to work with your internal team. Is there anything there that you want to get clarity on or address to set this external firm up for success?

For us specifically, we teamed up all projects with internal people. We wanted the project work stream lead to always be a unilever person. And then we basically asked the consultancy to make a bit of a mirror organization to our organization. They wouldn't be in all the work streams or they would be in all the work streams, depending on what we knew and what we didn't know and where we needed the support. But we asked them to mirror our organization and basically team up person to person so that when their report came in the end, it wasn't second guessing what we had done, it was seamlessly integrating with what we had done. And this is something we actually needed to have a bit of a discussion on. Because some teams that we discussed with, some external teams, they were used to being brought in as a stress test and basically have their own independent opinion pretty much second guessing the work that the internal team had done. We never found that to be particularly productive. We thought it was better to actually work together rather than siloed. That doesn't mean that we didn't want to hear what they had to say, but we wanted to hear it during the course of the project. So if they had a different view about the potential in supply chain synergies, for example, we didn't want to hear that during a final presentation. We wanted their supply chain lead to talk to our supply chain lead about it. And we wanted to make sure that we could bring in their input and expertise during the project.

If the team aligned and integrated with your team that they're really working together.

Yeah.

Did you end up with resources that were full time part of this team doing M and A, or were they fractional that I was curious about, like how do you sort of manage fractional versus full time resources?

Yeah, we had a core team which was full time and then we had what we called an extended team that were supporting us in specific projects. We rarely had people who would spend say 20% of the time on an ongoing basis. It was more project based and to be honest, a lot of people would do their day jobs and they would support us on top. But we had a mix of the both Models.

This is a challenge. I talk to a lot of companies and this is a tough thing, especially sometimes what sets precedents. Is it more important to work on the M and A project versus you're working on the day to day. The other element is burnout. How are you managing that for the part time resources?

That's why we called it coalition of the willingness. So we would only bring in people who would actually want to do this. And they were really passionate about the area, they were passionate about the work, they really loved it. They would make it happen. Not from tactical career perspective, but rather because it was their passion and they wanted to follow their passion. The burnout. Whenever you work on M and A, it's a real topic because it's very high paced, intense work and when you have a process ongoing, you don't have a lot of influence about when things happen or how much time you have or whatever. To me that was a really important topic specifically for the full time resources we had. And we did a few things, some structural things. For example, we made sure that you didn't run due diligence. After due diligence. Ideally you would work on a strategy project. You would do a long list of targets, you would identify one of those targets, start discussions with them, do the pre dd, the DD the transaction and then you would lead the integration work. And that's really the end to end that we went to a few times. Obviously you don't buy every company that you diligence. What we made sure was that if you had just been through a big due diligence, you would not jump into leading the next. And that was a really important structural principle that we had. And in addition, what we did more operationally was that we had standups on a weekly and daily basis. 15 minutes every morning and every week was half an hour. And it was my team, but it wasn't for me, it was for the team members. So we had the most junior person on the team would moderate it and it may seem very boring, but we didn't talk any content, we only talked process in those meetings and everybody went through, these are my priorities, this is what I'm going to do. A lot of the time they would find synergies between their different pieces of work. They would realize that somebody else was working on a similar thing. Or when somebody said I'm really struggling figuring this out, somebody else would say, look, we actually did this in a project way back and this is the person who led it. So it led to a lot of knowledge sharing. But it also led to reprioritizations and reshuffling of work. So we would always ask who's got a lot on their plate, who's got little on their plate? And the team very independently would reshuffle the work between themselves. I listened in, but I would rarely get involved. It was more when everybody had too much on their plate and reshuffling didn't help, then I could support them in reprioritizing all the things that we had on our plate.

I love standoffs. I like how you highlighted the value of them. Because when you have everybody giving these quick updates on what they've done and what they're going to do, you identify the synergies and the work that they're doing. I think dependencies also come up because we always talk about that. So much work to map these dependencies. But if you're talking about it and everybody's pretty clear what they're working on, they figure out those dependencies. And then you made a good point. The prioritization. I haven't even thought about that. You'll quickly know where you need to adjust prioritization. Also my experience is that you'll find where you do need to have meetings. Instead of creating a bunch of structured meetings, you identify. It's okay, you two need to go talk about that and figure it out. So love that you using standups on the daily and weekly basis. The end to end part. Tell me about that. You have team members that are running through the whole process. They're doing the diligence and then they're running the integration.

Yes, that's right. And that's one of the core principles of programmatic M and A.

You use that term earlier. Let's break down programmatic M and A.

Overall and on average, M and A does not create value. Unfortunately, I think most of the research would show that. And the approach within M and A that actually consistently creates value is programmatic M and A. I find three key principles really important. One is that M and A is more than a transaction. It's actually an end to end process. It starts with a strategy. It leads all the way to integration. Another principle is that M and A is a capability and it's not a one off event. You have to build this capability within the organization. You have to build it like a machine. And it's both a personal capability but also an organizational capability. And the third principle is that there is no such thing as a must win deal. When you fall in love with a deal, that's where you're going to make bad business decisions. Just because you love a brand doesn't mean you should own the company. And just because a company is fantastic, you shouldn't buy it if the price isn't right. But you really need to make sure that you have a big funnel of great companies so that you don't feel too dependent on closing every single deal that you're working on. So those are the three principles and you were asking about the integration and the end to end approach to M and A. So one of the things that I've found that is really tricky within M and A is when you do the transaction, you have a bunch of people who might want to do the transaction a little bit too much. Yeah, it could be because it's their job to do transactions. But the risk is that if you're only responsible for the transaction, you are not going to think it's so serious or bad if it doesn't land a hundred percent. Right. But if you're also responsible for the integration, you're never going to take on board a company that you don't want to integrate or capture the synergies from and really bring on board. What I've seen is that when you have a cut between the ones who do the transaction and the ones who do the integration, the ones who do the integration are going to look at the business case and their first reaction is going to be like, ooh, this is bullish. And then they're going to start by renegotiating the business case. And already there you've lost a lot of value. If you are as a workstream lead or as a project lead, if you're also responsible for capturing the value that you identify, you're going to be pretty realistic about how much value is there. And if you've done the business case, you're not going to start by renegotiating it, you're going to go and make it happen. That's why it's so important that it doesn't end with a transaction, but it also doesn't start with the transaction. Because what I've seen otherwise is that there is a big risk if you don't connect strategy to M and A. You're going to look for the wrong type of targets. You have to really own the strategy and develop the strategy so that you can find the right companies to approach and do the right type of considerations when you're evaluating them.

The golden piece of advice in the whole interview, I've done a lot of these interviews. I think this is probably the key, because I've seen where you have separate teams, they're disconnected of what you described. They start renegotiating the whole investment thesis because they look at it as too unrealistic. But it sounds like here you're really bringing people along the whole journey and giving them accountability for end results. And to recap, when we said programmatic M and A, the driving principles of it is end to end process. So that it goes all the way from strategy through integration and then the capability of M and A that it's just not a one off event. You're actually building M and A as a capability of the organization and that there is no must have deal. You can't fall in love with the deal. Try to get it done by all means. Have a robust funnel and do the stuff that truly makes sense for the organization.

Absolutely.

I love it. I think that's really the big practice. If organizations are falling, that's the big thing that they're really missing out on. I published a book a couple of years ago. It's like the whole thesis of it was you got to connect your diligence integration together.

I wonder what was the Christmas gift to all the members of my team? Your book.

Really?

Yes. I gave it to everyone on my team.

Oh my God.

Yeah, absolutely.

I'm flattered. I didn't know that.

We learned from you.

Oh wow. Those of you listening, that was Agile M and A that we published in 2020. I'm flattered. I didn't know that. I'm surprised and thank you.

You shouldn't be so surprised. It was very useful. We should thank you. We built a 2 billion business off the back of it. So well done.

We published it in 2020. Covid happens right after I published it. I was like, I don't know if anybody's going to read this.

Yeah, we certainly did.

Wow, that's really cool. That sounds like really aligned with the whole philosophy that you executed on this and had a lot of great success. The 2 billion, how many deals did you end up doing? And it sounds like the platform's still growing.

Yeah, no. Half a dozen out of the billions. There is quite a bunch of organic growth. We really bought fast growth businesses that continued to grow after they came on board and some of them even accelerated. So it's been good.

Maybe this is almost like a sidebar question. This is something I've been thinking of because I'm CEO of a company that's up and coming. It's a high growth company with about 50 employees and I Always think about M and A. Like I spend on all this time learning about M and A. I've done M and A. It's been about 10 years since I've touched a deal. I'm dying to do deals and waiting for the opportunity for this organization to become acquisitive, build an M and A capability. But right now we have so much organic growth and I'm always looking at this as a trade off that if we start doing deals now, it's going to be a big distraction because you're still a small team, you're still like striving for the right resources and filling it out. That a lot of these opportunities, I'm writing them down because I know how much it's going to take a bite out of the focus on their organic growth. I'm curious just from your perspective, how do you think about that or put considerations or maybe it is too early and I do need to let the company mature a little bit till that organic growth is under control and predictable and then start thinking about it in.

A people based business. As you are, you say you're 50 people now, that's the worst hurdle to overcome. So if you're able to overcome it, that is a big win in itself. Because what happens around 50 people is that up until that point everybody can have a view of everything and everybody can be involved in everything and really feel like they got ownership for the whole company. All of your employees, I bet they feel that what happens when you go above 50 is that it's not possible anymore and it becomes extremely painful for a lot of people because all of a sudden they don't feel as important, they don't feel as valued. It's not true, but they feel like the business has run away from them. So from a mindset point of view, breaking through the 50 barrier is the most difficult thing you can do as a people based business. Once you're through it and you say you got fantastic growth so maybe you are on a good path to actually break through it. But once you've done that, you've done the most difficult thing. I would say probably while you're in the process of doing the most difficult thing you can imagine in a people based business, maybe don't load a lot of other things on top. However, if you find it hard to break through, sometimes it's just good to load on, keep growing organically, inorganically, do everything just to get sufficiently high above 50 because then the continued growth is going to be easier.

That gives some good things to think about because I restructured the management team the second half last year. Now we got a full deck, new COO in place, all the depart functions reporting up to the coo and you can just tell it's going to be the next year is going to be a lot of getting bearings in order and getting a lot of internal organizational shift through each department as they continue to build for scale. So maybe you got a good point there. Just need to hang on for a little longer until you really sense that the team's ready for those kind of special projects.

Yeah, let's see. Hope you get through the 50. It sounds like you're set up in a good way for it. Fingers crossed.

Yeah, we probably shouldn't refer to M and A special projects by the way. I heard that's a no.

Yeah, it's a capability.

Right, Exactly. Given that programmatic M and A, a lot of it drives the ability to execute integration, which ultimately is the capturing of value. I guess the most important part of the deal. You either lose value if you don't integrate properly or you're going to create value if you do it properly. How do you execute integration? Have your team really focused to do it?

Well, we started with the organization really. And if you're leading a due diligence in my team and we acquired a company, you are also the project leader for the onboarding or integration. And the timeline we set for that was 100 days. So for the first hundred days after closing you are in the lead of realizing the value creation plan that you created really during the due diligence. From a work stream point of view, if you lead a work stream before the transaction, you're also leading the work stream after the transaction. So you're responsible for putting the contingency plan to life. For example, we had a lot of them for regulatory. I mean it's a heavily regulated space. We were in often young businesses that we acquired. So it was often a lot to do on regulatory. So during the due diligence you would do your regulatory plan, you would put all the contingencies in place, you would make sure that you requested the type of budget that you would need to make it happen. And then after the transaction was done, you were also in charge of doing it together with the target company and getting them on board with your thinking and presenting to them why it was important to do it like that and then making sure that it actually happened. So that was for the first hundred days after the transaction. For everyone who was involved in the.

Pre deal work, it goes back to holding them accountable. You created this plan during diligence, you're responsible to execute it post close.

Yeah.

You use this term smart collaboration in the future. What does that mean?

We did not want to do a hard integration of the businesses that we acquired. We didn't just acquire brands, we acquired businesses and we acquired their business models. So we wanted them to continue to have them. That means you can't do a hard integration into Unilever as a whole. On the other hand, we also said we're not a financial owner, so we're not going to be the best owner if we just hold the companies and give them financial targets. For example, in order to create value, we actually need to capture some synergies. What we did was that we saw that the best platform that we built was actually out of companies that were sharing some base and fundamental characteristics, but they also had their own unique strengths. That meant that the businesses we took on board, you look at them, it's all these Marty Pans. It's Neutrophil, it's on it. It's Liquid iv. It's. Well, they were all very unique that they had touch points. For example, Ollie and Smarty Pants are both gummy brands, so it makes a lot of sense for them to collaborate around Gummies. Whereas Liquid IV and Smarty Pants, they were selling a lot through Costco. It makes sense to collaborate on the customer side there like that. We found areas that gave opportunity for a lot of synergy capture, but they did not cover all the businesses. So instead of trying to find the least common denominator or force fit everyone into a cookie cutter approach, we basically said let the companies collaborate on the areas that make sense for them. Of course we're going to moderate it, but we're not going to force anyone into synergy capture in an area where there are no synergies. And that's basically what we labeled as smart collaboration for the future.

How much of that do you figure out pre close vs post close?

Most of it. Pre close.

Okay. You're really getting in the weeds and thinking through how these companies would potentially collaborate together.

Yes. And then you hope that it's going to work out. And I would say 90% of the cases it actually did.

So you get a lot of value on this end to end having the folks do the diligence because they're getting all this information. They're really thinking through collaboration opportunities, how they're going to integrate what they're going to integrate all those things while they're doing diligence. And then they're accountable to go execute on it. Does that happen naturally? Like you just put the people in there early and they just automatically figure this out? Or are there things that you're really paying attention to make sure certain things happen to give that assurance integration is going to go well.

If you look at M and A and you include the end to end process, it is a fairly complex capability. So I actually took a leaf out of McKinsey's book from my time there. How you teach people complex capabilities. This one is not just a skill and it's not something you can learn in a book. It's a lot about behaviors and mindsets and leadership as well as skills. We built a whole on the job program where we had a train the trainer approach and you start by supporting in a work stream and you end up being the guru who is training you. Project leaders. We did that sort of from a capability building point of view, but we also did a lot of knowledge sharing. So after every project, whether it was a deal coming out of it or not, and I would say 100% of the time that was actually the team's decision. If there was a company we wanted to acquire, we acquired actually 100% of them. Everything we didn't acquire, the team stopped, nobody else. All the projects that ended, they were seen as heroes. They would present to everybody else who had been involved the learnings from this project. The rationale for why we didn't go ahead. What were the learnings? Not just insights and skill wise and knowledge wise, but also methodology wise. We had a lot of feedback loops throughout the entire process to make sure that we didn't have to reinvent the wheel. We also made sure that we celebrated everything that people did that were in line with our strategy. If you decided not to pursue a company, we celebrated that. If you decided that we should pursue a company, we would celebrate that. If you delivered on the value creation plan that you had put in place, that was a big celebration. We really wanted to showcase everything that people did well all the time. And that was a very powerful feedback loop, actually.

I actually like that a lot. There's always a deal retrospectives. But you're even going beyond that because you're taking deals that you didn't do, saying where were the lessons learned? And really emphasizing that building this model of continuous learning sounds like it became part of that DNA.

Yeah, it did, actually.

Celebrating the losses too. I wouldn't say losses. You walk away from a bad deal, it's probably the best decision.

Exactly, exactly. No Deal is better than a bad deal.

Good way to put it. Brigitte, what's the craziest thing you've seen in M and A?

I've seen a lot of fantastic entrepreneurs that have surprised me. But I think the funniest thing was probably something that happened inside our company. So we had an intern on the team. We were pretty creative with getting people on board, especially before we had a formal team. So we had an intern, a guy who was from university. This was his first experience of the corporate world. We asked him to put together some bios of founders of companies that we were in the process of shortlisting and gave him a format. And he sat down and he worked away. And after that, we had a team meeting and everybody was going to present their findings. And when it came to his turn, he just looked at us and he was like, I don't know how to tell you this, guys, but these founders, they've made questionable animal experiments. They've been caught by the police. They were involved with this very, very weird organization. There was some question marks about the death of a relative to one of them. So he had all these really, like, red flags in terms of this is obviously a company we could not pursue, because imagine what would happen to trying to explain this to the investors why you bought a company from people who were clearly not displaying the same type of values that we wanted to represent. But he had made such a beautiful presentation out of it. You know, you'd really used to format the template. And he had made a beautiful PowerPoint. All the data were there, all the sources were there. It was so nice. So in the next meeting with the cfo, we actually brought these and we said, this is one of the companies that is very high on our agenda. And he started reading it and we presented it. And it was quite a while until we didn't manage to keep a straight face anymore. But we had a really, really good time going through that list together with him. He had a good sense of humor.

That's funn. That's the best part in M and A. You gotta keep a sense of humor. And kudos to the intern for digging all that up.

He did a fantastic job.

Yeah, very funny. I love it. This has been great. Thank you so much for the conversation with me today. I learned a lot. You've helped me become a better M and A scientist. And we're gonna go skiing.

Yes, we will. It's fantastic weather on the slopes, so looking forward to that. And thank you for coming all the way to chat about M and A. I really enjoyed it.

Those of you still with us, thank you. Thank you for sticking through. Till next time. Here's to the deal. Thank you for taking the time to explore the world of M and A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you 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 Reflection 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.