Virtual Summit Recap: Leading M&A with Integration

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Is Julia Rollins and I'm a Customer Success Manager at Deal Room and I'm.

Here to introduce our next session today.

Which is leading M and A with integration. Our speakers are Stacy Hendricks, Senior Director at Alvarez, and Marcel Carlos Sesta, Vice President, Corporate Development at Presideo and Javan Moussali, Global Head of Partner Channels, Partner Solutions and Platform Transformation at Travelex.

Thank you Julia and thank you to M and A Science for hosting this discussion. We're excited to be here and we thank everybody else for for being able to join us today. I'll introduce myself quickly and then we'll have the honor of introducing our two speakers as well. I'm a Senior Director at Alvarez and Marsal and I'm on the M and A Leadership team for the Corporate Performance Improvement Practice there. Prior to A and M, I was the Head of M and a integration at McAfee and then prior to that led acquisitions and divestitures at Hewlett Packard and Samsung. I've also been on the other side of the coin and been a co founder of a clean energy company and also advised other startups on the sale and funding process. Also with us is Javed Mosaji. He's the global head of partner channels at Travelex. He's experienced in leading large scale programs that deliver strategic partnerships, digital experience and M and A integrations. He has more than 15 years experience in the fintech industry and has played various roles involving product go to market, commercial development, strategic planning and MA integration for Carlos Kesta. As VP of Corporate Development at Presidio, Carlos dedicates his time to defining, executing and communicating the company's growth plan. He's an investment banking and private equity trained corporate development executive with more than 20 years experience in strategic initiatives for notable companies such as Verizon, Solomon Smith Barney, Citigroup, Dentsu, Aegis and CIBC Oppenheimer. He's led a variety of transactions that included principal and advisory led engagements, venture capital, private equity investments, joint ventures and commercial arrangements. So it's my great pleasure to be able to facilitate the discussion here today. I'm excited to chat with you guys about the topic of leading M and A with integration. This is a broad topic and we can go in lots of different directions here. Lots of us have been on both sides of the deal. We played roles on both the execution side and the integration side and know that poor integration is one of the leading causes for deal failure. So what exactly does leading M and A with integration mean to you? Carlos, let's start with you.

Thanks for having me Stacey and Kasem. I'm more on the deal side, right? For me it means when you look at a deal in competitive supply set up and you're preparing your bid, you're going to look at certain things that are intimately linked into the deal. So for me it's like a spiral project that you every time that you revisit one topic you affect the other. So you think about the economic terms of your deal, their structure in the deal, if there's a learn out, but also where at that point we're conceptualizing it. You also think about where in the entity, the acquirer that entity is going to report to, how are you going to integrate, how fast or how slow and are they incentivized. So for me, every time that you change one of those variables, it affects the other. Let's say it's a competitive bid situation and you decided to put an earn out on it, okay, there's consequences and it's going to change how you're going to integrate. So for me, it means bringing the lead integrator at that point of the deal into the conversation with the deal sponsor. There's a second point that for me, more tactically, it means developing an integration strategy or plan with the sellers, together with the sellers, discussing with them the points that many times about integration that will not end up on a merger agreement or anywhere else in the deal. At least you have some sort of like letter of intent, a joint letter of intent of how you plan to integrate the acquisition.

Javed for me, integration are two things, right? First, the meaning of integration. I think you have to make sure that at the core of all of this discussion, a, the strategic intent and the goal is upfront and is very clear to both parties. We also need to make sure that the customers and the products are at the forefront of anything that we're doing, right? So integration has to have those components and those guiding points are really, really the forefront of everything that we're doing. And that's what then drives the integration further down the road. It's very important that we have customers at the forefront and what products. And it will vary. It'll vary by the nature of the products or the partners and the companies you're acquiring. Certain deals warrant more complex integrations. Certain deals warrant just bolting something on. So integration can vary and will have a different meaning. And we need to bring people into the integration, different stages depending on the deal time.

I think you both mentioned starting integration early, so I'd like to dig a little bit more into that because I think especially, you know, there's a little bit of a push pull sometimes between the deal teams and the integration teams as to when the integration teams come in. So in your estimation, when does integration actually begin? When should the team come in?

In my view, I think integration and by the way, before I started, I think today there's a trend where corporate development and a lot of integration guys tend to be formed as part of the same team. So I think there's a tendency towards that, which is a great thing. Having said that, there's still a little bit of a blurred line there. My view is integration should start at the targeting stage. I know a lot of people say, hey, it should go to start towards due diligence, but I think there's an element where it should start at targeting stage. Now, working closely with the corporate development guys, I Think subject to having the right integration lead and the right skill set, they should come in a little bit earlier because they should understand and include some of the integration criterion components into the targeting criteria and profiling of a particular client that you want to target or acquire. And as you bring those criteria integration criteria into the mix, it allows for a better, I would say, valuation further down the line. Right. And it allows you to prevent any risks. It allows you to not fall into some of the pitfalls that typically we've seen. You don't want to end up in a situation where you've closed a deal. And certainly as you're going through the integration momentums, you're opening up the bonnet and you're finding a lot of things there. If you've got an experienced integration lead, I think they can come in a lot earlier in the process and help. They can help with a bit of the experience, introduce certain criteria into the profiling of targets.

The best experience I've ever had with integration integration leads was I brought the person to the pipeline weekly meetings. That person will know what's in the pipeline and how we start thinking about it. And also getting a little bit more tactical when you start the deal integration for me, it will be another diligence of workstream in addition to HR it. And as we start doing discovery, those discoveries start feeding into what the integration plan is going to look like. And that person's delivery at the end of diligence is not diligence report but the plan itself. So for me it is very early in the process, but it's maybe limited to that one person that is your right hand integration.

Okay, so early in the process and I think you both hinted a little bit about the profile of that integration lead, talk a little bit more about that person kind of what is that? What's the ideal profile for an integration lead? And is it just that one person or do you bring in two or three people on an integration team early? So kind of what does that makeup look like? I think a lot of people get kind of confused about what you're really looking for when you're looking for a person to come in and lead the deal.

Having had experiences in large companies as big as Verizon in and then middle market. What is really interesting is that in the middle market you have ability to be a little bit more creative and you need someone that is almost like a COO type level. And it's funny, I had so many discussions, I mean I can't prevent bringing some stories on this where I had to hire someone and then the regular vision was oh, we're just in the project manager, right? And like no, no, no, no, no, it's not a project manager. There's product manager is a big component of that person's going to do. But that person has to be a high sense of commercial operations, economics of the business. Otherwise if just a project manager will be consulting with so many people in the process and is never going to be able to be proactive into seeing the issues that are going to come up down the line, anticipate them, address them, understand the ramifications of those. Remember that spiral that I was talking about? That person is integral part of it. Oh, this is going to affect that. Oh God, it's going to affect that, Communicate with people, anticipate. So it is a very hard profile to get worked in international companies. And then it's hard. You have one person that what is the background of that person? SEO is the closest thing that I can think of. But it has to be someone that has a lot of background into the business and understand how things works and also navigate the politics of the structure. Because many times in there are bad news that we have to deliver to someone. But you anticipate how you're going to deliver and to whom and who's going to be able to break the walls and clear the way for you to resolve that problem.

Javid, what do you think?

Yeah, no, listen, that makes perfect sense. I think Carlos mentioned CEO type person. I echo that and I think they should also be, they should be GMs, right? And they should have the right gravitas, the right credibility and they should be able to influence, right. Some of the thinking around. How do you bring two companies together? I mean if you think about integration, you're essentially setting up a business, right? You're bringing two worlds and you're combining it and hopefully creating a new entity to deliver growth. Right. And so that requires a certain type of a profile and certain type of role. Certainly not somebody who's just a program or a project manager. That definitely underpins a lot of the activities. But that's more around how you go about executing and governance. But you certainly need people who understand technology, who understand can they grasp what is a performing business, what I need to do to achieve a performing business, how do I set up a target operating model, how to understand the relationships between suppliers and customers? It's more of an all rounded business person that's required, certainly the need to be able to handle senior leaders and influence them because Quite often you'll have very strong characters with egos and personalities that you need to manage, which is really important. So certainly a CEO type of a GM that has that experience to be able to navigate organizations. But having said that, a little bit, I know Stacey, you mentioned about is it just the integration lead. But I think what's important is also to bring some of the product and some of the salespeople a little bit earlier into the integration process because they may have some insight. Just by them playing in the market space, in the landscape, they're really interacting with customers, they're interacting with partners. So they may have some insight which is quite valuable. And I think we need to bring them early in the process. But listen, I'm mindful that with any deal there is cost and resources associated with managing a deal pipeline and along with confidentiality. So you can't bring everybody on board. But I think it's selecting the right few people which can make that difference. Earlier in the targeting and then due.

Diligence phase, I have a couple of follow on questions to that. I think sometimes in a deal when you were talking about an integration lead, being a GM level person, I think as being on the corp dev team myself, there's a title on that slide that says integration lead. Sometimes there are two people on that. One's on the business side and one's on the corp dev side. What's the delineation there and how does that work? Is it a double duty? Who's leading that deal? And then as a follow on to that, I'd like to get into that question about when to bring in the sales team so we can talk about kind of both of those. And if either one of you guys would like to take first crack at.

That, I can take that. I don't know about titles though, but I think ideally would have a lead integrator that has a portfolio of integrations that he or she is managing.

Right.

Because they are long term processes and that person is both managing their portfolio of integrations, but also someone that has done a lot of deals and understand if it falls. I think that's sort of lead integrator. Someone in the business. Yeah, this is also very helpful. I mean if you can double that, that'd be great because I think you combine the best of both worlds. Someone that is in the business and knows that you cannot, I don't know, force Microsoft Office on this company, this acquisition because they're not going to take it or it's going to cause major disruption of the business. With the experience of someone that has done a lot of deals and said it's okay because this is how we solved this in the past. And there's a solution that is already sort of vetted by everybody. But I do think if you can double team, it's even better.

Okay, Javid, one of your areas of specialty is this go to market and sales. So let's talk about when to bring those guys on. I personally experienced a lot of pushback bringing salespeople in early to the process. There's confidentiality issues there about not bringing too many people on too early. So when is the right time to involve the sales team in the process?

Yes, I think it's important to distinguish where you are in the process. Right. So bringing on the entire sales team, that's part of integration. Right. But if you're not at that stage there, what I was referring to is at least bringing in the head of sales or head of a product. And obviously they're operating within confidentiality because earlier in the targeting phase and in Judy lynch, you can't have the entire team there. But they'll bring insight to you. So I think we need to just understand where we are in the process of the deal. So if you're in targeting and due diligence, you bring limited heads of sales and heads of products into the mix so they can provide some insight into that process beyond when you're getting into due diligence and then beyond and into the you've closed the deal and you've gone into the integration phase, then you tend to bring them a lot more into the mix. Right. So I hope I got your question right, Stacy. Is it more around post closure or is it prior to the closure that you're referring?

I think I was asking about both. And you know, I think that the go to market piece of this, I think, you know, people get really involved in the logistics of just getting to close. And so the go to market piece sometimes gets pushed to after close, but sometimes sometimes maybe gets pushed too far down the line or it's not even really part of the formal integration process. We can deal with that later. So talk about the criticality of the go to market piece of this and when you bring the team in and when you start on that to just the criticality overall of that piece of the integration plan.

Yeah, and that's, I think, a great question and I'm kind of quite passionate about that one. So I think go to market, market pass once you've closed the deal, it's a strange One, because typically if you think about the corporate development guys and the ones that I've interacted with, they touch on go to market as their profiling and targeting customers, right? They're looking at revenue, they're looking at customer cohorts, they're looking at a number of things that products, channels. So they're looking at a number of areas. And quite often once you've closed the deal, that kind of dies down a little bit, that momentum dies down. Coming back to the criticality of go to market integration, I think it's the first thing you should be doing because as I mentioned earlier on if you think about why do we go and acquire a company, it's either because we definitely want to get some growth there, some kind of inorganic growth. And you're going to do that by combining customers, by combining products, or by combining a certain skill set. But that invariably depending on the dealing the nature of the deal. But in a lot of cases where integrations involve and complex integrations evolve, it means you're combining customer bases and products and therefore you need to start with that. If you don't start with what type of customer am I serving, what's my customer base? You can't then have the right discussions around what systems are required, what people and skill sets, what processes need to be combined. You often go into the operational element, the mid and back office integration topics around systems platforms without really truly understanding which customer base is this serving. In my mind, you should always start with go to market planning because that's part of your target operating model and your setup. You start with the customer, you start with the products, and then the rest of your organization capabilities should align to that. And that's what you also do in strategy. So I think it's fundamentally important to have go to market plans around integration at the forefront of any decision making. If you truly want to achieve a customer success or a customer plan or a customer value raise, and that's my genuine opinion, but that's very much relevant where complex integration is required. If you're buying a company that you just will need to bolt on because it's purely just a certain skill set, then you can have a fairly loose integration over there and you can almost leave their sales teams and their go to mark teams pretty much untouched because you want them to flourish in their own world with a very loose integration, go to market planning is really important. What's the consequences of not doing that? There's a number of things I've seen this around. You can see customer service levels Dropping. You can see customer attrition, they're defecting. You can see a bit of a blurred roles and responsibilities within teams. So imagine you have two sales teams coming together and then two related operational teams coming together. If you don't integrate the products, the offering, or at least come to an agreement of how you're doing that or when you're going to do it, you get confusion around roles and responsibilities. Your customers get confused around what are you offering them, which brand are you? How is it, how does it work? So you can create a lot of and destroy a lot of value and confuse, I think, not only internal stakeholders, but also confuse your partners if you don't start to think about go to market earlier in the process. So I think it's a very important element because it touches also on partnership, it touches on your supplier.

Can I follow on that as well? It's also a smart thing to do, I think, bringing the go to market in the beginning of the process because a lot. Oh, my God. A large percentage of the deals that. And talk about synergizing how one plus one equals five, whatever. It starts with that investment thesis that there's more here that we can sell together. If you're doing diligence, if you test that upfront and the answer is a no, you save money, but not continue due diligence. It's a smart thing to do because you stop spending money on it. A quick no is sort of the second best answer we can do for a deal. Just to do a quick parenthesis is a smart thing to do.

Yeah, yeah. No, I think that's very true. I think it's quite important. But the reality is there's complexity in how you measure it. Right. So how do you. There's a lot of complexity in combining a sales team. And, you know, the sheer fact of putting two sales compensation plans together is a nightmare. Right. And it's very disruptive. Right. So people tend to shy away from it. They tend to shy away from complex measurement things. They'll say, we'll leave that for further down the line. Right. And then to tend to focus on more tangible things. You know, whether it's combining offices, combining a couple of centers of excellence, and shifting people around so those are a little bit more tangible and a lot more easier to measure from a KPI standpoint. Whereas, you know, product sales is a little bit more complex to measure. So they tend to leave that, unfortunately, a little bit further down the line. My view is that you should bring those difficult questions up front and force yourselves as A combined team to answer them and be upfront and honest about the value creation. Some of the synergies you're going to get revenue synergies is always a little bit harder to do than cost synergies. I think we all know that. That's one of the reasons, I think where we tend to push it further down the line.

You both hit on synergies, which is a perfect segue to my next question which is let's talk about some tips and tricks in the integration process that helps you hit those synergy numbers, whether it's revenue synergies or cost synergies.

So if I had known the follow up I would probably have not interrupted but I mean it was all in agreement with him. But that's what I've been trying to do in the more of a smaller deals and upfront and it also has a lot of correlation with what Kirsten calls the agile M and A because all you're doing is you're parallel tracking things that were usually in sequence. So one of the tricks is just test the synergies early on. Even if you can do a week before between signing an LOI and starting diligence, just spending time with management and doing a deep dive into the value drivers, if those make sense. I think it saves a lot of money because you're probably in many cases wrong about that. Thesis was I think that's one of them. And the other trick that we say to capture is just referring back to what I was saying. Designing the integration plan together with the seller is not only exercise of, you know, making them part of it and making sure that there's no surprises later, but also you're going to likely be discussing very touchy things into that process. That's when you test a little bit more the chemistry between let's say the seller or the CEO of the company and your principal sponsor inside your business. Because I mean up to that point, I mean I bet that everything is being rose as an oh this is great, this is great, we're going to buy your company, everybody's happy and but avoid the more touchy issues and in that process those issues are discussed and you test if those two people are going to be bridge builders or it's their way or the highway. And I've seen deals that break at that point because disagreements when they should become a little bit more ugly.

So Javed, I see two questions there. First, love to hear your take on the synergy tips and tricks. And then Carlos raises an interesting point about how you handle Disagreements in this process, particularly when the disagreements are with C Suite executives. How you handle that? So can you start in on the synergies and lead us into our next question as well?

I'm not sure to what extent there are actually tips and tricks around synergy. It's a very black and white thing in my view. Synergies, particularly around the cost and the revenue synergies, some are a little bit harder to achieve than others. Right. And some harder to measure than others. I think if I had to give one tip, it's just identifying those synergies very early in the process and making sure that the integration team as a whole is accountable for that along with the business. So you have to make sure that it's not just the responsibility of an integration need to go and measure and identify synergies. It has to be the wider business. I think if you can somehow, from an organizational standpoint, if you can somehow include some of those integration KPIs into the overall business scorecard, which then trickles down into employees, and it's harder to do and it's easier said than done. But if you can do that, then you're ensuring that the broader organization and the employees and people across the organization are also bought into some of those synergies and contribute in some way, shape or form. So you're starting to actually force integration through measurement and then making sure that everyone's accountable. So everyone has skin in the game. Right. So if you can manage to do that, that's kind of a good thing, I would say.

Yeah. I've tied payments to integration milestones in the past. That's a good one.

Stacy. Those are.

Yeah, sorry, I kind of doubled up on you there. So, you know, Carlos raised an interesting point. I think we've all been in rooms where there are clearly disagreements about the way forward, whether that be with the integration team and the executive sponsor between two CEOs. How do you bridge that during this process, especially if it's coming from C Suite executives? How do you address that?

For me, the one thing that's important is that is going back to the original objective of why the acquisitions took part. Why did the CEO and of the acquired company decide to sell? Or why was it, you know, why did they do that? So it's going back and reminding the C Suite why we're doing this. Quite often you've closed the deal and you're getting into discussions which sometimes could slip. Right. And then you're dealing with your egos. You're dealing with passionate people and Large personalities, but we easily forget, well, why was this done in the first place? So I can give an example. Like it sounds a little bit silly, but you're selling your house. You've decided to sell your house and you've got a buyer. Close the deal. The buyer comes in and as you're walking out of the door, he's saying, you know what? I'm actually going to paint the external wall of this house fluorescent pink. And you're saying, well, hold on, this was my baby here. You can't go and do that. But the reality is you've lost a little bit of the right to say what you can and can't do. You've already agreed to sell that house. Now, what you may want to focus on, rather than being quite confidential, you might want to say, well, listen, you can paint the walls fluorescent pink, but it might affect the look of the house, it might affect the rentability, it might affect the value of it when you're trying to sell it, it might affect your relationship with your neighbor. So it's coming back to why do you want to sell this in the first place? So it sounds a bit silly, but there is a little bit of human stuff in there. So you need to be able to bring the C Suite back to the original intent of why the acquisitions took place. What were the original objectives? Then that helps them bridge that gap and say, okay, how do we want to achieve this? But having said that, we should never really shy away from disagreement as long as it's for the common good and it helps to get to the common goal. Right. They may have, you know, it's important to listen to the. To. To. To. To parties that are giving a slightly different opinion. Right. And they may have a valid reason, particularly from acquired. The acquired and target companies. Right. So it's important to listen to them at the same time, but always bring it back to the original objective of the acquisition.

Right.

And the strategic goal of those.

Carlos, any thoughts?

Yeah. So I think in particular, when you look at how a deal sponsor want to integrate a certain deal and at some point the corporate development person has been around for so long that sees when things are not quite right or someone in the C suite say something that doesn't quite jive with your experience, I think try to resolve with them first. But if it's been in situations where the deal sponsor was, well, who am I? Right. I can just based on that, on my experience. So looking at how the deal sponsor wanted to integrate versus how I've seen being integrated, certain Assets that way. I just casually spoke with people in the business just to get sounding walls on. Am I thinking this is the right way and if I had a big conviction about it, talk to others out there on the C suite, I don't know. Ultimately again, examples and tactical deals have been killed that way where there wasn't necessarily an alignment with our history. So I spoke up.

So that's one of the pitfalls. Let's talk about some other pitfalls. Both of you are international deal guys have done lots of cross border deals and I think that that's a real topic of interest for people. Pitfalls in general in the integration process, but particularly in cross border deals which can get very, very complex very quickly. So Carlos, do you want to start us off there and talk about what you think some of the pitfalls are and how to mitigate them?

Yeah, especially in terms of integration, I think you need someone, we need books on the ground first and foremost. So reverting back to what we're talking about, that structure where you have a lead integrator, whatever the headquarters of the company is or wherever your MLA lead is, you need someone in the business, in the country or in the region to facilitate or to be part of the integration team as well. In terms of pitfalls, I, you know Javid, if you had experience, but I think culturally it's a very different approach. Especially like the dental was responsible for all Latin America and the way I think a project manager changes things in the northern industry here is a little bit different than there. If you, I'll be blunt, right. If you're too aggressive with them, chasing them for things in Latam, they're not going to respond. They're not going to respond. They're going to do a loop around you. They want a few part of things. Right. So emotional intelligence plays a lot into this and that's the way business is done down there. Right. So you need to be to make them feel they're part of the deal, bring them along. It's not flashing your ranking in front of them that it's going to get things done. So I think that's one of the pitfalls. I think having someone in the region and also acting with deep sense of empathy to how the things work there. Does my experience apply to that as well? Is it transferable or do I need to tweak a little bit?

David, what do you think?

Yeah, no, that makes perfect sense, Carlos. I think from my experience there are a number of challenges with cross border deals and the obvious one is things around legal and regulatory environments. When you go about combining teams or trying to achieve cost synergies, doing that in the Nordic countries versus in Europe or doing it versus Germany, Italy, France and Spain is very different. So a good example is in France and Italy, the labor laws are quite favorable to employees, rightly or wrongly, and therefore trying to make redundancies takes a very long time. So that can impact your integration timelines. Right? Right. Similarly for some of the, you know, some of the compliance and then regulated environments. Right. So the challenges are on there. The other one is very much like Carlos mentioned, it's not only a corporate culture, but it's also people culture. Right. So, you know, having an Anglo Saxon corporate style versus, you know, a very, very French or very Italian type of corporate culture, combining the two is quite hard. Right. So sometimes there's certain subtilities. When people say one thing, they actually mean something else. So I think it's important to take those kind of things into account. But also customer and market behaviors change. I remember I did an acquisition where somewhere involved Europe, markets and North America and we had massive, massive check printing going on to service clients. Right. We wanted, in most of the other markets, customers moved away from checks and therefore we wanted to close down a whole operation involving checks because it wasn't a very productive thing. But it meant for some reason keeping a very high, intense, costly Czech printing facility for North American customers. So there you see the synergies there vary because markets and customer behaviors were preventing us from achieving certain synergies. It can impact once you dive in and you open bonnets, the number of factors that can impact these. When it comes to cross border things.

A couple of people have asked about other blind spots in the integration process. So outside of cross border deals, do you all have other thoughts on other blind spots that people may need to keep an eye out for during this whatever part of the integration process?

I was thinking about culture because one example came to my mind, especially when I was doing acquisitions in the media space where innovation is very fast and you're acquiring companies that are millennials, Gen Z, while management is probably Gen X boomers, it can be a challenge. I haven't seen a deal. That's the thing. This is a whole other discussion can be had about culture. I never seen a deal be killed by differences of culture. We always think we can handle it. But I've seen deals not work because of culture synergies, not getting there. I think there's a whole lot of people that I talk to that are trying to Figure out how do we put culture into the equation? How do we measure that? Don't have an answer for that. I'm happy to join discussions about my bad experiences with it, but I think culture is a. I know it's overused, but I just don't know how to put that into the equation yet.

Certainly a critical piece. And I know that there's another session during the conference just talking about culture. So, Javid, what about you? What are some other pitfalls that you think that people really need to look out for?

I think from my experience, I've always been a little bit burnt by the complexity of platforms and systems. So we kind of get a view of that during due diligence, but we don't really get a true picture. Right. So it's a bit, I think it's important to have people who understand the product, the market, and then what systems are required. I've quite often in my experience, you've gone in and you look at systems, you're then from an integration standpoint, you're left with multiple legacy systems that you don't want to try and combine into one platform. And that is never successful. And it takes a long time. And what happens is you end up transitioning that into business as usual and then it loses momentum and you write it off. So I think one thing is to actually truly understand how systems are supporting your customers and your products. And are they the right systems? Can you really migrate into another system or not? Right. So that's one thing I think that I've always, always been a little bit burned. Right. At least from an integration. And we know it's a lot, there's a lot of complexity there. Right.

Certainly. And there are a couple of questions about the technology and IT platforms. There's a philosophy with some companies that you should just continue to tack on systems and let them run independently, and others really have it all or nothing. You're on our platform, we don't accept any other platform. So can you comment on that a little bit on those different strategies?

Yeah, I've experienced both. Right. And the sad reality is the people who are very kind of military and Germanic about it suffered in the short term, but in the long run they were better at it because you can then the downside about actually just tagging on multiple systems is you can't truly have a very good go to market strategy. You will always be faced with problems with certain customer sets on one system versus the other, and therefore your go to market becomes a lot more complex. You can't have a really solid strategy around go to market. If you have to play with multiple systems, particularly in this day and age where everything is moving towards digital and it's moving so fast, you want to have data and use data in a very 360 degree way where you can understand your consumers systems and platforms is critical. So you either move them onto one but if you have them playing around on different systems you're going to struggle with go to market strategies. And a little bit to what I was saying earlier on, if you don't have a solid go to market plan, the rest of your areas tend to fall apart. Right. So I would not encourage people just putting a band aid on systems. Make some harsh and radical decisions upfront and they will give you dividends further down the line. The consequence I've seen companies today were still struggling with that and they can't really meet customer needs with that and they've had to write off, they've accumulated a lot of technical debt and they've had to write off a lot of things. So my advice is not to have band aids approaches around systems.

Carlos, what do you think about the IT piece?

Yeah, I was thinking about as it relates to the deal side that issue gets even more amplified if you have an earn out in place. I've been through companies where as you said, the first is like let them be whatever platform they're on their own just to become a bigger problem later down the line. And then corporate comes to me and say, you know, right now, from now on, every deal that we do, they have to take these systems and by the way you have to negotiate the price for them. So I felt it's very disruptive to the deal team because it feels like a little bit of retrading. What you try to do is estimate those costs and how they're going to affect the company's P and L upfront install estimate. It always feels like a retrade towards the end. So that goes back to that spiral that I was saying. If you going to force a system in there, you're going to mess up with their cost structure, then you're affecting the earn out. So you better be careful about how you're thinking about structuring the whole deal because people are going to be unhappy. Yeah, fair point.

So we've talked about all kinds of different topics. We started at the beginning. When do you bring the integration team? How does it begin? How do you know when an integration ends? When is it over? Is it over when the last IT system is integrated is it over after 100 days? That's the philosophy of a lot of corp dev teams. When does it end?

From my perspective it goes back to what were the original KPIs around integration that was set at the forefront. Typically you want to have some KPIs around customer, around your finance, around the human element of it. If you've got some core integration milestones and KPIs once you've achieved those, then you can officially say integration is over. And then you transition that into either a business as usual or into some form of a transformation stage. Integration is over when you've hit your integration milestones. That's the short and sweet answer.

Yeah. Try to boil down to something that is simple when your synergies are achieved. Because if they aren't, then they become a workout. And a workout is also a problem of the integrated person. So that you know, those things don't happen. It actually extends the period. I'm thinking I don't have a good answer for that.

So some integrations can go on for a couple years. You know, when you get past this hundred day period, which you know is a really typical milestone in integrations. How do you keep an integration team engaged if you need people to continue on? Most companies don't have a dedicated M and A IT team and a dedicated M and A HR team. So how do you keep those teams engaged?

I think one way is probably, I think like I mentioned earlier on is to include something in their, in their scorecard. Right. And include something in their personal objectives that somehow link to the acquired company. Right. Or the combined company. So I think that's one way to keep, to keep engagement so that you're not losing touching on cultural integration that can't be done in 100 days. Right. And in some cases can't be done in two years either.

Right.

So what are some of the, you know, the elements that can be, can be incorporated in the scorecard and then drive that all the way down that you know, what gets measured, gets managed. Right. So and then you can kind of ensure engagement there, around, around, around that, that, that process.

Carlos, any thoughts?

Yeah, I always thought about it depends on the scale of the company. If it's small company can do that because we were talking about the, the profile of the lead integrator or the integration persons. Being someone that has experience in the business. I always thought about and never been able to do it like a bench of people or like rising stars into the businesses. They wanted to do one integration and then go work for that company, you know, take a leadership position in that company. I was never able to do that, but I think it's a great opportunity. Great opportunity for rising stars that in whatever discipline. Right. It can be in different disciplines. You can establish a bunch of people that, you know, rotate, go into a project, ended up staying with the. The acquisition or the portfolio company. Maybe that's a way to actually not only financially, but career wise, to position.

People to be incentivized when facing periods of exclusivity. How do you prioritize integration planning while also considering that you need to complete diligence in a very tight time frame?

It's been done. Comparative processes. We just have to put the integration plan together with the information that you have. It's been done, but again, you're compromising part of it. I think that's the main point of the question. You're compromising some of it. So I think it affects how you're gonna price the deal. You're basically increasing the risk of the deal. Right. So if I'm on the shoes of the sponsor, I was gonna say we have limited time to do this integration plan, so I'll probably pay less or we're definitely taking more risk.

Javid, anything to add there?

No. I think if I understood the question is if you've got limited time to do some kind of due diligence. Yeah. How does that impact Integra? No, I couldn't. I echo what Carlos just mentioned. Right. It's important that there is sufficient time to be able to actually understand what's under the bond. Otherwise it definitely should affect your evaluation. Right.

And potentially.

Or not. Right.

Well, I'll tack on one point to that. When we do integrations or when I've done integrations in the past, one of the edicts during the diligence process is that we are not only talking about a go, no go decision, but we are doing integration planning during the diligence process. And it's a dual goal. The teams know that going in, they know what the objectives are. So it's not just should we do the deal, but it's how we should do the deal. So I think we need to wrap up. I really appreciate both of your time and all of your wonderful insight. So hopefully you all have a good week. Really appreciate those of you who are able to join us. And thanks again to M and A Science, Kisan and your team for putting this together.

Great. It was a pleasure.

Thanks, Stacy. Thanks, Javin.

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