Virtual Summit Recap: How to Modernize IMO

Hello M and A friends. If your M and A team is still managing M and A with Excel for sourcing, diligence or even integration, I'd love to show you how a modern information system improves collaboration, distribution of information, knowledge transfer, change management, all resulting in much better outcomes. Learn more@dealroom.net Also, if you like this podcast, please tell a friend we're looking to build the largest community of forward thinking M and A practitioners. Now on to the interview. I'm Kisam Patel and you're listening to M and A Science, where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A Deals. This interview is a rewind from our virtual summit. Hope you enjoy it. If you want to see the full version with video, visit mascience.com this is.

Julie again with Deal Room, here to introduce our next presenters and the topic of discussion is how to modernize IMO and and building a synergy plan that actually delivers. So our speakers for this will be Jonathan Shirey, Director at Guidehouse, and Bill Clarken, Head Mergers and Acquisitions at BMO Financial Group. Great.

Thanks Julia. This is actually my second presentation of the day. The first one was not with M and A Science, it was a kindergarten science experiment. So if we can't get through IMOs, I can certainly tell you about molecules and mixing oil and water afterwards. So appreciate everybody joining Kisan. Thank you and the M and A Science team for holding this session. It's been an I've got to listen to a number of the speakers, so fantastic content coming out and we hope to keep the ball rolling with the IMO modernization discussion as well as building a synergy plan. I'm speaking today with Bill Clarken who leads up the BMO US M&A department and the corp dev. And Bill has a tremendous amount of experience. And so before we jump into the discussion itself and I'll pull up the principles that Bill and I will be covering today around modernizing the imo. I'd like to give Bill an opportunity to talk about his background in M and A because he has a unique experience in the fact that he's seen both sides. He's sat on the integration side and he's now upstream into the Corp dev. So he knows both of our pains and I think that's a unique experience that many of us have not had. So Bill, to kick us off, why don't you walk through your M and A experience, the roles that you've had and then your current role and what you're focused on today.

Thanks, Jonathan. Thanks, Kyson. Appreciate the opportunity to be here and talk with everybody. Molecules for kindergarten. I mean, seems like you're going pretty next level there, Jonathan. I'm kind of surprised by that, but okay. My background so started out in consulting, did that for a number of years, and then I actually wanted to watch my family grow up and went over to bmo. Throughout consulting in it. Then at bmo, I've been involved in a variety of different deals. So when Jonathan said that I've been on both sides, I thought he meant being acquired and being the acquirer, which I have been on both of those situations numerous times as well. I have gone through everything kind of you can see in a M and A lifecycle. More currently, I am kind of involved in kind of the full suite from beginning to end as far as target analysis all the way through to making a deal and then the integration that's involved. Throughout my career, I've been involved in about 12 different acquisitions, have done the integration on a lot of those, and I've seen portfolio acquisitions as well as full deal entity acquisitions and everything in between. Obviously have also been involved in some divestitures. You know, I think Jonathan and I are hoping for good Q and A. We'll be monitoring the chat, but would like to kind of make this as interactive as possible. But hopefully you'll take away a few things that we've learned throughout our time and we can have a good productive hour together.

Thanks, Bill. And so to kick us off modernizing the imo, I put up a slide that we have referenced here, and we're going to discuss some of these principles. And then Bill has been kind enough to provide a couple key takeaways, especially in the new environment that everybody's dealing with. But Bill, what's your view? Just to kick off from the highest level. What is the role of an IMO and how do you view that? Does it change on the deal, or is it generally a same approach, same type of role and scope from deal to deal?

To me, an IMO is kind of your center point. It is kind of the Grand Central station for an acquisition and kind of all points come into and go out of the imo. It's not as though we're trying to be micromanagers are involved in all of it, but we're trying to be that connection point and make sure that we can drive that. As far as your second question, Jonathan, is each IMO the same? I'd go the opposite and say each IMO is completely different. You have to take the IMO and you've got to kind of cultivate the strategy of both the business as well as why you're doing that deal to establish what the purpose of the IMO is. There are IMOs that I've been a part of that are kind of slash and burn. There are IMOs that I've been a part of that are much more, I mean, almost the opposite of that continuum that are take everything that we've just acquired and make that our best of breed and figure out how we can kind of drive every synergy and every opportunity out of that. And so I think how you structure and how you build the IMO then becomes important based on kind of understanding not only the strategy the acquisition is, but the strategy of the business at the time is as well. Because one of those on ramps or one of those train depots is coming into your Grand Central Station should be from the ongoing strategy and the ongoing business plan. And how do you integrate into that?

And the IMO itself, is that an organization that stays permanent through the cycles? Because every company has up and down cycles of M and A. Sometimes they're acquiring, sometimes they're not. Is that a full time role and full time organization?

Yeah. So, I mean, that's a good opportunity for me to give my first caveat, which is I'm a banker, been a banker my whole career. So my experience is going to be specific to banking. But I think for MA it applies pretty broadly in most cases. But I do think that brings up a good point. So a company like GE in their heyday, they would have a permanent acquisition team because they were a serial acquirer. And there are some very large companies that do have that permanency of their IMO and of their acquisition teams. But I think most organizations, because BMO is no small company, I think most organizations may have a few people dabbling in it, but it has to be more of an accordion where you're flexing as you start to ramp up, or as you think you're going to be ramping up on an acquisition. You need to kind of flex on that and be able to add that. But that sort of gets to that first principle. And I'm sure that's where you're going to go next, Jonathan. So I'll let you go there before I start diving into that.

All right. Well, I see my ability to be subtle and play poker probably isn't so good, but yeah, that's where I was going. So as you go into the first principle and the bench strength creates rapid flexibility. This does tie into what does the IMO look like or a modern imo that's ability to flex as you go into larger deal cycles or more rapid than decreasing. And so tell me a little bit about this principle or tell the audience a little bit about this principle and how you think it applies to organizations and how they should look at it.

Yeah, so I mean, it is an accordion. You're never going to, I mean, unless you're the largest of organizations that is constantly acquiring, you're never going to be able to have a permanent kind of IMO team. And so you've got to be able to flex with that like anybody in any part of your body. It's a muscle and you've got to kind of train it. And so what I found is a good procedure is to ensure that kind of everybody's ready is having kind of quarterly or even semiannual checkpoints where you do kind of test some of the playbooks, test some of the event preparedness and kind of our due diligence pieces. And so we have gotten into that kind of cadence over the last couple years and that's helped you now know who your go to points are. People may rotate in and rotate out, but at least you can start to train them and train that muscle. But I think that's important. And then, you know, having a good speed dial, having those people that you know are going to be your go to people you know, as you get into a deeper due diligence, you got to determine how you start to involve people. My general principle is involved as early as possible, but how you're going to start to be able to involve people and how those people can get involved very quickly. But have that speed dial, make sure you know who you're going to call and who you need to involve in each area, be it finance or operations or technology or a certain business unit, make sure you know kind of who your point people are and who do involve there. And then the other piece that I wanted to talk to is elephant hunters and we almost use this. But elephant hunters tend to starve sometimes. But elephant hunters, when you're looking for the big deal, it's not like we're selling one widget at a time or anything like that. And so people will kind of forget about you and it's on you if you're kind of that point person for your organization to kind of keep those contacts alive, make sure they're kind of keeping that maybe not frontal load, but Always kind of in their thoughts and thinking about how they can do that. I've been able to generate a lot of different solutions or possible solutions that we'll be able to use by staying in contact with people where they say, you know, Bill, we're implementing this, but I see it applying to an acquisition and here's how we would do this, or we're going to build it this way so that we can quickly convert the data onto this new platform. And we'll still have kind of that conversion layer, so we just plug right into that and it'll be able to go on board very quickly. You kind of exercise that muscle and you help people stay fit and they'll help you as well.

You said a lot in that statement. And one of the areas as we talk about modernizing the imo, the traditional IMO that I had seen throughout my experience had really been focused on, you know, you're doing the current deals. If you're in the acquisition mode, you're, you're, you've got your team there, you're going from deal to deal, and then after it's all done, you kind of disperse and there's nobody else left. And so then you have this loss of institutional knowledge and these kind of muscles around M and A. And in a new modern world, which fits really well into Key Son's agile M and A, I believe, you know, this kind of accordion principle that you talked about plays away in order to flex. So you go smaller when you're not in the IMO mode, but you still keep some of those muscles exercised and trained and ready to respond and be resilient, which is, I think, the key theme of today's world.

Right.

You have to be resilient. And so it also, what I really like about your principle is it keeps into these three takeaways as well. And so you mentioned each deal is a little different and integration is challenging. Only certain people are cut out for it. So when you think about your bench strength and your looking around and you're keeping the context, what are the type of skills, the type of talent that you're really trying to measure and make sure that surrounding, in the event that there is an elephant that comes your way.

Yeah, I mean, I think it's a great point. I want to touch on one other thing before I get to that, which is Covid has certainly had its challenges. It's also had its benefits, and I think everybody's found some silver linings into it. M and A would be one of those. And I think we learned a lot about how we can work together. A lot of times you're doing deals across the country or across the world and so you can't be there all the time. And I think we've learned a little bit how we can work a little bit differently on some of that stuff. I think we've also learned how to be a little bit more flexible and how to kind of be a little bit more distributed in our decision making on some of this stuff because we've just frankly had to. And I'm hoping that has developed some muscles for people that typically aren't involved in acquisition but maybe have a periphery role because they have experienced something at lightning speed, which is typically what acquisitions are. So to get to your other point on the Now, I can't remember what your other point was. I wanted to make that clear about.

The bench strength and what you're trying to assess as you're looking through your organization.

Yeah.

So the skill sets, I think they're important. I've said this a hundred times, but acquisition work and MA work is not for everybody. Most everybody seems to want to do it. At least there is a fascination with it until some people get involved in it. But it's not for everybody. And maybe early in my career it wasn't for me. Maybe I've matured into some of this stuff. You know, I think there is a patience side to it. Not in that you can't. You need to go slow and we'll talk about that later. But you've got to understand that there are certain things that you can't communicate because there's a. It's two parties and that other party is not part of your company, at least not initially. So you've got to negotiate, you've got to be patient on some of that stuff. I think it's a steady personality that doesn't get too high or doesn't get too low, that isn't afraid to one, understand the big picture, but also roll up their sleeves and understand the details and get into those details. I think that's. That. That's really the strength that I bring to this. But then there's also the. You can't add stress. I know early in my career I was definitely labeled a bull in the China shop. You can't do that. You've got to understand and kind of keep that level rudder because there is a lot of stress involved in these to begin with because of the timeline, because of the dollars at stake, because of what was paid for this, because of frankly, change Management and new people being introduced into the organization. You can't add stress. So you've got to look at those people that are those kind of steady rudders within the ship and you've got to look at those people that really know their stuff. So that gets back to the big picture. But also being able to roll up into the details, they've got to be able to do both because you're going to need to do both and you're going to need to do both in short order.

What type of technical skills has agile kind of functional methodology knowledge as well as technical data analytics or other type of skills that have become so predominant out there? Are those playing a bigger role in the modern imo? Do you, do you see that starting to occur?

Yeah, I mean the agile stuff is interesting in that I think we all want to be agile and we want to do that. It's a little bit interesting when you're doing an acquisition because it is a one time thing. You convert or you integrate and you're done. So there isn't this constant iteration. There are ways that you can be agile and manage that. I think that the bigger thing and the bigger principle that I've seen from a technology standpoint is really thinking about the reuse. Not even if you're going to be a serial acquirer, but if you're going to be somebody who acquires on a somewhat regular basis and probably more that periodic basis like Nemo does. I think it's very important to be able to try and build things once, but you can reuse many. And so that gets back to that earlier point. Some of these groups have now started to try and build things that we can quickly, quickly connect to and quickly integrate with. And I think that's a critical piece to this is how can we do that and how can we use the technology the best we can? The other one that I'm most interested in and frankly haven't had that much chance to really operationalize it. I've spent a lot of time studying it. I've got a lot of good prototypes and principles is the robotics. I think there is great opportunity in robotics to do some of this stuff, be it from legal contract review and, and having some of that language translation and language review so you can search out certain terms like poison pills and termination clauses and really help the legal team help themselves. So I think that's one example. But I've got countless examples of the robotics that I think is another kind of example of how we can modernize the imo.

Right. And as you think about setting up the imo, and usually that probably starts to flex more rapidly as you go into a deal that you're looking to be more serious about, and it's getting closer. And so that leads us into the second principle. The pen is mightier than the sword. And you're sitting in a negotiation. How do you set an IMO up for success in the upfront negotiations?

First and foremost, make sure the IMO has a seat at the table. Whoever is going to be running the IMO needs to have a seat at the table. I've been called in after we negotiated the deal, you're always drinking from a fire hose, but now you're drinking from a fire hose, and you don't know any of the history. So I think that's an important principle there. But to get to the pen is mightier than the sword. I told you earlier, I definitely was categorized as a bull in a china shop at points in my career. You need to really love your legal friends. Document everything. You're dealing with another party that's trying to get the best value that they can as well, that's got their agendas, and you can't really control those agendas. You need to document the meetings, you need to document each agreement and make sure that that thing gets cleared by legal. But use the pen. Fighting those battles with emotions and everything else, sometimes it can be kind of fun and juice up the adrenaline, but at the end of the day, the practical idea is use the pen. Make sure you're documenting. Make sure you're putting everything out there, and you've got to document every little piece. Right. Especially if it's, you know, something that there's going to be an ongoing relationship with the company you're acquiring, and you've got a TSA understanding all of those and understanding the flexibility that you need in that TSA to be able to add and subtract things and kind of what those processes are. I think those are all important. And make sure you negotiate what you can for you and your organization. Both organizations are up for their best interest, but don't put things in there that are very difficult to prove because it'll always come back on you. Can. We had a couple situations where we had elevator clauses and things like that, and we felt it was both parties didn't make the deadlines, and so there shouldn't have been an elevator clause, but the elevator clause was in there, and it was pretty cut and dry, so we ended up having to go down that route. That's a lesson learned. So we'll move on from there.

And does that typically happen in areas of HR like around the people part of it or what other areas have you seen within the negotiation stage that tend to be a headache later on as you're trying to integrate or keep a divestiture or what have you moving forward?

Yeah, so the HR one's an important and an interesting one because you have a lot of different people moving over. And I think both organizations, at least most of the ones I've been a part of, I'm not Richard here from Pretty Woman or anything, so we're not trying to cut and burn too often, but we are really trying to look out for the best interest of the people. And I think the company selling in most cases that I've been involved with is also trying to do that. So generally we come to pretty good agreements. But things like severance packages, things like some of the small little fringe benefits that people have that maybe we don't offer to our current base, and how you negotiate that and how you handle that and how you frankly transition off of some of that stuff is important. So we're always trying to think through the human side of it. But to answer your question, I think it's the technology that also has a lot of this negotiation. And the penny is really important because that's going to last a lot longer. Normally on day one or shortly thereafter, the employees become employees on your system and then you start working on that change management piece. But the technology is probably going to take somewhere between nine and 18 months to convert full. And so you're going to have to have a good understanding of what the uptimes are supposed to be, what the SLAs are supposed to be, what their responsibilities are in the conversion processes, how we work through a lot of that stuff. And it's all depends, right? It depends on how quickly the deal is consummated, how quickly you take ownership of the systems. In some cases you may just lift and shift those systems and then you've got to figure out what you're going to do with them. In an entity situation, own the whole entity and their system so that something you can take more time on and think about. In an asset situation, there may be more negotiation that you've got to pay attention to with some of those technology.

Pieces and our experiences as well. When you start looking at the actual integration side of meeting those agreements, especially in today's environment, where it does look like a lot of the acquisitions are going to be less around growth strategy. Although you're growing as you're buying, you're going to probably be buying at times some distressed assets or some distressed companies and those companies are in fire sales. And guess what happens with people that are working at a company that knows they're in a fire sale. They're looking for other jobs and so they're losing people or trying to deal with the latest balance sheet issue while you've just bought part of their company. And when it comes to whether they're going to try to deal with keeping their companies surviving or just making it through without going bankrupt versus do you making sure your TSA has been adhered to, it's really interesting to see the difference in priorities and how that starts to diverge across the two companies. And so we've seen a lot of challenges there. And the capacity to make sure that they have a plan around that if they're in that type of area is a really important question to flush out or else you can end up in a bad situation real quick.

Yeah, it's actually just a real brief point on that, but it fits with the pendant mightier than the sword. That's another component where you've got to write it down. But get people on retention agreements, especially if you think there's a high risk of flight or they're a critical resource for whatever purposes you need. It'll cost you a little bit in the beginning, but it won't cost you at the end. You need those critical resources and sign them up.

Now you've made the negotiation and assuming that we've gotten the pen in detail and we've set the modern IMO in a position of success, you've had the bench strength, you start looking at the integration and the deal's just been announced and you start climbing that mountain. What does that principle mean to you in today's world and how do you start to build the vision of going up something that's going to be such a challenge and it's going to be a roller coaster of emotions and events along the way.

Yeah, this gets to a little bit of your earlier question of what are the right skill sets. But what I mean by climb the mountain is this isn't easy work. It's not cut out for everybody, but it's not easy work. You're going to be working a lot of hours. You might be working a lot of off hours. You may be to trying traveling a lot. It's not for everybody. So it does get to that stay fit idea. Make sure that you're kind of paying attention to yourself, though, as well. You do have to find a life balance associated with this. I think that's really important. I think that's important in anything, and I think I'm very good at that. I've seen plenty of people that just throw themselves into this and kind of hate themselves afterwards. So make sure you do that. The other principle that I would say is embrace the journey. It's fun work if you let it be. You get to meet new people. You're dealing with new stuff. Frankly, you're not fighting the investment plan nearly as much because it's already built into the acquisition. And so a lot of times, you can do a lot of cool stuff. And it's a great opportunity for learning and developing yourself and learning new things, learning new people, learning new cultures, learning new technologies. I think those are all great. And so I think that's really important. On the downside, and this is something I, you know, I think we all continually learn this lesson, but there are specific skill sets, and there are people that are not aligned to those skill sets. You've got to learn to cut bait. You've got to learn that. You got to move on from certain resources, depending on, you know, which people are listening. And if it's any of the consultants I've worked with, they might say that that's something that I do very, very well. You know, there have been situations, and I recall one where I had just let one consultant go, and I was getting a reputation, and I was worried about that for whatever reason. And then this consultant, first day on the job, they have a consulting. And this is while I'm at bmo, so they're a consultant to us. They have a company function or something. Probably overserved. I'm certain he was overserved and missed meetings. The next day after, I kind of said, okay, we're gonna start transitioning this stuff to you. And I felt like I had too much of a Chainsaw Al mentality. By the way, I apologize for some of my dated references between Pretty Woman and Chainsaw Al, but people in my age group will know what I'm referring to. I hesitated to let that person go, and they stuck around. And I actually think they did fine work, but I could never trust them again. And I never would sit in the meetings with them. I would just always make sure one of their management team was managing them for me or what. But I could never trust that person again. So you got to make sure that you kind of cut bait with people that you don't feel are fitting into what your vision is and what you feel you need for the given roles.

Probably two follow up points there. First is, although Kisan has often referred to me as the consultant, especially when I use multi syllable words that don't really have a whole lot of meanings, you and I have not had a chance to work together. So that was not my team that got left over.

Very fair point. Very fair point. I'm not throwing.

Right, right. So I just want to put that out there. But no, on a serious note, the second point you made is actually kind of a new question within the mix of this principle that we've discussed, climbing the mountain. So when you go down the path of say climbing Mount Everest, you've got base camps, you've got a team that's going and you just use the word trust. How important is trust into climbing that mountain and how much does that play as your previous working experience with others or the trust that you build quickly with the other, the acquired target in order to make that journey?

Yeah, I mean, I think it's critical whether it's an M and A time or whenever I'm doing something else. I think one of the techniques that I've always done is I never eat lunch at my desk. I always try to, and it's exhausting because I'm almost always the one trying to make the lunch dates, but I almost always have lunch out of the building with one or more people trying to catch up on stuff and trying to get to know. And when you're at the beginning of an M and A, obviously there are times where I'm going to be eating my lunch at my desk. But I do really try to stick to that principle. And at the beginning I try to stick to that principle where I'm inviting the people that I don't know that well. There are people that I've got deep trust in and we probably don't need to go out and we'll probably go out plenty anyhow. But those new people, I need to really understand them and they need to understand me and we need to have a good working process. So I think that's really important to kind of trust the process. I think the other thing kind of along people's personalities and stuff. As one of the leaders in the IMO and one of the leaders of the acquisition, you can't. Again, another dated reference here. But don't stop believing. I think most people know that one though. There's got to be a positive influence in a person that always is saying, yes, we can. I don't care what it takes, we're going to make it because a lot of people can get down and you've got to have those cheerleaders, those people that can pick people up and kind of push them. And that's certainly a role that I've played at times, probably to the point where there's probably some memes or some things people can make fun of me for.

And when you look at that climbing the mountain, when you take the second part, which is the base camps of a mountain, right. And those are almost the milestones as you're moving up. You know, you have this team, you've built a team that you trust, you're moving up. Are the base camps or milestones in the traditional M and A process, which is, you know, you've always heard here, day 100, legal day one, legal event day one. Are those still the right milestones that coincide with some of the discussions you and I have had on how to accelerate the integration and really meet it within a time period of say, a year and have fully integrated team, or should those milestones start to be considered differently?

I mean, I think a lot of them are still the same. I mean, you're going to have an announcement, you're going to have a legal day one. We actually did employee day one because of some HR constraints and I think to the earlier point it really worked out to the benefit of our employees or our new employees in that it didn't create hassles around benefits, it didn't create hassles around enrolling twice and things like that. So we actually delayed the employee cutover to allow for some of that. You know, I think the first hundred days, which is a great book, I think that really applies to M and A and that you've got to get a lot of things in place in those first hundred days. And you know, the, the lesson I always remember from that book is making sure you've got the long term leadership team in place. You've got to do that quickly so you can start making decisions, start moving forward. I think as you get further, if you've got some iterations and some agile pieces, I think that's important. I think, Jonathan, where I would really say there's a big difference is it gets to knowing your strategy and knowing what you're trying to do with the acquisition. I think there's roughly three approaches you can take. You can do kind of the traditional waterfall approach and you know, sometimes that's helpful and useful, that normally ends in a big bang. And sometimes that's what has to happen because there's so much system integration and there's so many different overlapping pieces. You've got to do that. But you can also do, you know, kind of a phased integration. And that to me is, you know, Maybe we convert 10 branches and convert 10 sites, or we do some small chunks and you do minimizing your risk learning as you go. So that is an approach, and that has different milestones associated with it. I think the third one is what I'll call a tiered approach, which is you may be able to convert certain systems at once or at certain time periods, rather than having all of them in a big bang. So we did this two acquisitions ago, where we did one portion of the acquisition six months out. We did the second portion 12 months out. It really did limit our risk. It basically converted half the business, and then it converted the other half the business. And so that was helpful. But each of those has its own kind of pros and cons, and that could be a whole discussion unto itself, for sure.

And that probably goes into the next two principles very well, because as you're trying to figure out what is the best integration strategy and the approach to each target, you've got two other things that are going against you. One is time, which speed is key. And then you also don't want to have analysis by paralysis. And so you don't want to delay. So you need to be able to move forward. How do those two principles play into your thoughts as you're going through a deal and either you're assessing it or you're moving into the integration?

I like to run fast. Not a runner, but I like to run fast. I guess I like to bike fast. You know, you've got to go quick. One, you've made this deal for certain businesses, business strategy purposes, and you want to start getting the values, you want to reap the value. Two, you know, it's human nature, I've found, to want to delay and to think that, oh, man, we can. We can get this better and we can do this. Resist that temptation. Got to set a date. You got to go and you got to go hard at that date. It reminds me of, you know, the. Probably my favorite case from business school, but it was the CEO of Honda Motor Corp. And he laid out ambitious goals to get into the US and none of his direct reports, nobody at the company thought it was realistic. And I'm not comparing acquisitions necessarily to building a Goliath like Honda Motor Corp. He put it out there and then a date that everybody thought was unrealistic and then they achieved it. And you kind of saw that momentum building as they got got towards that goal. The same can be true about acquisitions because I guarantee you, when you lay out the date, I guarantee you 75% or more of the people are going to tell you can't hit that date. We need to delay. It's going to be a large number of the people are going to say, what are you thinking with that date? And stick to that date. Stick to your guns. You can always delay, but don't delay until you absolutely have to. But that does get back to that gets to 0.5. Don't delay. It'll take you three to six months just to replan once you've got the delay. And then you've got to do whatever work you're delaying for. It is too difficult. It's too challenging. Obviously there are going to be certain situations where you're going to have to delay. But if at all possible, go and go hard. Find a way to get through that. I like movies. I've quoted a couple already. But there will be blood. There is always blood in this. There is always challenges. You've got to be able to patch those up and move forward. And so being agile, being nimble, being willing to kind of deal with that and know how to triage that problem solving is one of those skill sets I should have mentioned earlier. But you've got to have good problem solvers, people that are just going to figure things out regardless of what's going on. So those would be some of the concepts I'd have on those two points, Jonathan.

Yeah, and you know, as you're talking through that, that might allow us to bring in the Synergy Plan a little bit into this part of the discussion. Because one of the areas, and I told you I've been always fascinated by, is how many people, whenever I'm on the ground talking about the integration, have no idea around what are the actual synergies or the deal rationale in the first place. And they've never read that investor presentation which sits out there on some corp dev website for the company. I always find that kind of interesting. But yet a lot of those synergies are really kind of upfront and some of them are around getting quick wins in there and moving forward fast. Is there a place around building that Synergy Plan that allows you to really trigger the speed and prevent you from delaying and create a sense of urgency in the organization? And would that be an effective tool for getting everybody moving in the same, I guess, direction.

Yeah, I mean, I think it allows you to bring the entire organization into it because this is going to be part of their plan and part of their process and part of their financial plan. And so when you talk about speed is key and do not delay, that applies to the synergies. Don't delay in putting them into the overall financial plan and the overall business plan. Make sure people understand that you're going to have to hit these numbers as well as kind of your normal run rate numbers. And this is why we've made this acquisition. We put it as synergies. And doing that as quickly as possible, I think is important. One, to kind of build the culture and say this is part of us and this is part of our DNA. But two, to kind of keep everybody's feet to the fire and make sure that they understand we all have to kind of believe in these numbers. We all have to kind of live these numbers and we all have to hit these goals. We're all in this boat together. So I think those are important pieces.

One of the reasons why you see a delay almost goes right into your principle six, which is 80% is the right answer. Everybody wants to analyze, analyze, analyze. And there's so much access to data now that there's too much information and not enough knowledge. You know, what's your view on allowing yourself to get to the 80% and moving forward so that you don't delay? And how do you actually practically get everybody on that board and getting away from that over analysis?

I'll get to that in a second. I want to go back to our other point here because I see a question from looks like Quinn and he's talking about what's the plan for developing targets and tracking synergies over time? It is a dashboard probably a little bit common and overused a little bit, but you got to be able to track that stuff. But I think the important piece there, Quinn, is integrating it into the business dashboard. You should have a standalone dashboard so you can understand the acquisition deal and the acquisition value, but it's got to be integrated into the business level dashboard as well and kind of move that forward so that it's within their scorecard and they're being incented and they're being comped on them. So the 80% is the right answer. I mean, everybody likes to overanalyze and this is new stuff, so it's cool and we want to take a look at it and all that. But go back to principle four. And principle five, don't delay. Speed is key. You've got to have quick decision makers. You've got to have everybody at the table when you're making the decisions. Way too often we have to have five meetings in order to get the decision made. One try and break down as much of the hierarchy as you can. Have quick decisions. That's part of why you select the team that you do have those people in place that gets to that hundred day milestone. But have the long term owners at the table so that we can make the decision quickly and move forward. But yeah, use the data, make the decision and you're gonna get some of them wrong. 80% doesn't mean I'm 100% confident on this decision. But I guarantee you if you make decisions quickly, you're going to get there a lot quicker to the end game. There might be a few more mistakes than if you spent time getting to 100% on every answer, but there won't be a lot more mistakes. There's been plenty of answers that I've seen people try to get to 100% on and they still get the answer wrong. They might have a little bit higher confidence interval, but that extra 20% does not equate to a much higher confidence interval.

You have a view and this is kind of an off the script type of question. Bill, ripping up the script here a little bit on one of these areas, the 80% is the right answer. Do you think that there's too much analysis due to consensus decision making versus there was a principle that we discussed, one throat, the choke, like the single accountability. If you have the decision making power and you can make that decision, do you think people tend to make the decision faster with less information versus 10 different perspectives around that decision, which means that you analyze it longer and potentially don't actually create any more additional value on that actual final decision?

Yeah, I do. I mean that gets back to my point about coronavirus early on in this discussion. And I think that really has hopefully changed us a little bit in that we can empower people a little bit more and we have single point decision makers because we have to move quickly and we can. That is very important throughout this process. And you need that single throat to choke an operations question. You need to know who you go to and get to that answer. If something bubbles up, if there's a problem, who to involve and how do we mobilize quickly. And then that person, he or she can take it and go with it and they may need to delegate it to some of their team members. But you've got to be able to push that to kind of single points that you know can deliver on. So yeah, that single throat to choke is something that I like to live by, whether it's in M and A or in other roles.

Back to the original question about the reporting and the dashboards and how do you build a synergy plan? We talked about having that in the dashboard, having it integrated, having accountability. The one thing I've never really been able to get my head around, and it's an area perspective that I've started to take, is why, or at least a question that I've been asking, why aren't synergy plans treated more like project plans and actually the original objective of the deal? So for instance, you know, the easiest example I use is if you're trying to reduce cost by $1,000 and you have 10 days to reduce that by day five. If you haven't reduced it by $500, then you're not on target to hit that synergy. I've never seen, at least in the different deals that I've been part of, a synergy tracking plan that actually manages it similar to almost as synergies, as micro projects. Do you have a view on that or have you seen it differently in your perspective?

I don't think it's done well and I'll throw myself under the bus on that as well as you and I have talked about, it's something that I'm exploring and trying to learn. I'm trying to figure out better ways to do it. You know, I do think it gets to having those decision makers at the table and getting them to sign up for the synergies and making sure they understand what they're signing up for. But anybody that's been through, you know, a due diligence and been through a pre announcement phase and those that we're going to throw a lot of synergies at the wall and most of them are going to stick because that's what we need to do to make the deal happen. And so then people are signed up for certain things. I think it's how do you then think through, okay, what are the creative ways to get there and what do I need in order to ensure that a lot of times we can't put some certain bells and whistles and we can put certain things into a plan. And so think about how we build to deliver on those synergies and thinking about how you get creative and restructure your business or restructure your way of thinking.

And I hope that this creates a natural lead into number seven, which is talk isn't cheap. And so one of the things that I've seen in M and A deals and we've talked a little bit about it moving quickly, keeping the dates firm, making sure that you've got things upfront, negotiated, holding people accountable, but then you see an M and A deal and I'll just be honest, I've done this for 15 years of my career and I'm like, oh, okay, revenue synergies. Yeah, I wonder who just came up with those ones. Right? Or you look at a deadline and you're like, yeah, that deadline was just made up. They're going to move it like they moved the last 10 deadlines and we're all going to work 14 hour days going up to that deadline and realize the day before that we've got to move it out a month, even though everybody realized that already. How do you view talk isn't cheap and how do you kind of keep, keep the integrity or the credibility of the organization as you go through and I'm being kind of tongue in cheek here a little bit or a little cheeky because I also know there's a lot of reasons why that stuff happens. You're learning a lot as you're going through what made sense at one point may not make sense anymore after you start to move through it. Yet that context isn't always there when somebody's seeing that stuff happen. How do you keep keep the credibility and integrity of the organization as you're going through these. But yet knowing that you've got to be flexible and things are going to change, sometimes they're the better.

Yeah, I mean, I think what you're saying is similar to what I said earlier, which is you got to kind of keep that positive attitude. You've got to put that carrot out there and you got to keep people focused on it, marching towards it and you've got to celebrate the little victories here and there and I think those will help from that standpoint. It takes an army and that's where talk isn't cheap came from. The change management and the communications and the building the vision and getting people to buy into the vision and explaining all of that. It takes money and often we forget about that. Often it's excluded from an acquisition budget or it is minimized. But you've got to spend a lot of time on the communication, on the vision, on the those pieces. The other thing I've really seen as successful is having that strong leader that's going to continue to run the business. And so if that's coming over from the other organization or if it's somebody that you're deploying, it's got to be a strong leader that's out in front of people often and really displays the confidence that we know we can do this, we know we can hit these numbers, we know it's daunting, but we have the right team and we can move this forward. And so I've seen that in both the good side and the bad side. But, you know, it's obviously a lot much more easy when you've got somebody that's really aligned to what you're trying to do and really aligned to what your end goal is. And you really want to identify that person while you're in the due diligence phase. So you've got somebody that you can quickly deploy and can be there right from the start. And is that mouthpiece? Yeah.

And, you know, I've had a chance to speak to a lot of different corporate dev departments, and one of the things that I've really liked about our discussion is that you have to have a leader that has a lot of courage to say, like, this is where we're good and this is where we're not. And I've heard that in you and our discussions. I've always enjoyed those where you've been brutally honest, even on your own self, saying, hey, this is where I've learned some lessons. I might have went too hard here. And I think that that authenticity is an important part of communication when you're going through an M and a cycle, because people don't expect things to go perfect. But you know, when you look at somebody and you say, well, I expected the sky to be blue, but it's purple. And they keep saying it's purple with a straight face, you start to lose that kind of trust into everything else that they're saying as well. And I find, you know, especially in today's environment, that authentic communication in today's world is going to be critical, if not one of the most important aspects of really kind of getting people on board, especially if you have a lot of remote culture starting to happen.

Yeah, I mean, the one leader that I'm thinking of that was basically perfect for the role, I think that was probably his biggest strength, was that he was highly authentic. And you could tell as soon as he opened his mouth. And part of that was his Texas draw. But I'm not sure I think it did help. But he was very genuine. Very authentic. And that certainly does help. I think the other side of the talk isn't sure, because even the authentic business leader and yourself is the IMO lead and others that are very close to this. You've got to have those people that you can trust, that you can go to outside of that close knit circle that you can say, does this smell right? Is this right that maybe aren't as close? Because often I found I get too close to the detail and I skip nine steps because I'm like, well, yeah, that's obvious. Well, it's obvious to me because I've gone through all those nine steps. It's not very obvious to the person that this is happening to or the person that we're asking to do this because they can't make those same quantum leaps or even small leaps that I might be making because I've been living and breathing this for 3 months, 6 months, 9 months, 12 months. Making sure that you've got those sanity points that can say, I don't even understand this, Bill, you're scared. Skipping a bunch of steps or I don't understand how you got to this point, I think is really important because I know that's an area where I have to check myself a lot. I tend to make a lot of those leaps and people don't know how I got there.

One final question for you. As you're thinking through that context, as far as communicating and explaining and making sure that everybody's on the same page, how important do you believe when it comes to the progress of integration and the overall synergy captures, is it to communicate that even outwardly, outside of the organization publicly and say, okay, you saw that investor deck. Here's the synergies, here's the deal that we were planning to get. Did we really get that? If not, here's why. Is that something that you find organizations should be doing, are doing, or at.

Least considering the synergies, is an area that I'd like to continue to enhance on. We clearly go through the lessons learned. And I know because we've had kind of consistent people in some of our acquisition roles over the last couple of acquisitions. It's helped a lot because they have not only their tribal knowledge that they remember, but we do have lessons that they participated in and that they can utilize and leverage and they understand what the context was and why we were thinking about those things. I mean, that gets back to that pen is mightier than the sword. That's a different point on it. But once you're done, you need to document everything so that you can remember it. We're all getting older, myself certainly, but we've got to. You don't want to relive history, document it, understand what those points are so you can dust it off. It has saved me countless hours, countless days, countless weeks, because I've been able to kind of do some of that. I know two acquisitions ago, that was one of the kind of key things that we did was we had documented everything from our prior acquisition and being able to go in there and quickly ramp up. I think I blew away some of the project sponsors and the acquisition sponsors. We had the IMO stood up probably in 24 hours because we had all the templates already ready, we had all the reporting that we wanted, and so we were able to go quick and it was brilliant. And so I think establishing those frameworks right now, while you may have some downtime, if you're running IMO or if you have a role or even if you're anticipating or hoping to run one of these, think about building some of that stuff ahead of time and structuring it and working with some of those other people that build your bench strength to give yourself a leg up and push it forward. Great.

Well, hey, Bill, I know we're almost at the top of the hour. There's a few questions. Kevin and Quinn, thank you. And I think there was a couple anonymous. Bill, thank you so much for joining us. It's been fantastic having you. I think there's obviously a lot more to talk about here, so I'm not going to put any pressure on Keyson, but I hope to see you two on a podcast later sometime as well.

Yeah, I mean, I already touched on Quinn's question and I think the other non anonymous person said that they kind of answered it and it looked like that we had. I can probably do kind of a lightning round here. I have read through them. I just sort of passed that point. So I couldn't. As far as external advisors versus internal, I mean, never hire Jonathan or any consultants. I would stay away from them at. At all costs. But no, in all seriousness, you need the resources. You're going to have to hire people, but make sure your decision makers and your key people are internal people. I think that's the most important part. And then take as many internal people as you can because they've got great knowledge, but you have to hire people and they're going to have specific domain expertise and understand where your gaps are and where your weaknesses are and fill those gaps with the consultants and the contractors. As far as project managers versus Integration leaders, there are two different skill sets, clearly, and that's what you're pointing out. I think the project managers are going to be necessary. The way the question's phrased a little bit is I think is a little derogatory towards project managers. But you need project managers. That's what keeps you on task. That's what helps deliver. The integration leaders are the people that are going to be those throats to choke. So I think there are roles that can work in parallel or work together. I don't look at it as an either or and so those would be my quick responses to either of those. Jonathan, I don't know if you've got anything quick on this.

No, I think in a matter of time I think you hit the key points. So as much as I as a consultant love to talk, I will be mute on this one.

Well done, well done. And so first, Jonathan, I appreciate the time KSA and I appreciate being included and hopefully this was helpful to everybody's day at MAScience and really appreciate everybody participating and joining today. Stay safe and healthy.

Thanks so much for listening to this episode of M and A Science. If you want to stay up to date on the podcast and all things M and A Science, including our events, make sure you sign up for our weekly newsletter at mascience.ma Teams that use proven techniques deliver better outcomes. Agile M and A is a science based framework that focuses on responsiveness, adaptability and continuous improvement. You can view the whole book online for free@agilema.com and if you're still using Excel trackers and old school virtual data rooms that charge Program page what a ripoff. I highly recommend taking a look at Deal Room. Deal Room is designed for collaboration with internal and external teams. Visit dealroom.net to learn more. You'll also find lots of free resources, templates, ebooks, guides. Thank you again for listening to M and A Science. See you next time.