M&A: Keys to Post Acquisition Success with Keith Conley

Welcome to the Rethink Sales podcast. I'm Mark Danolo.

And I'm Michelle Seger.

So, Michelle, we're talking about a fun topic today. We're continuing our conversation about M and A and making the sales organization successful because we know it's not just about doing the deal. It's about getting things to work from a revenue standpoint.

That's right. So one of the things we know is that M and A activity was the greatest that it ever was in the history of M and A that we have recorded anyway in 2021 and 2022. Slowed down just a bit. But now that you've done the acquisition, what next? Right, and that's what we're going to talk to our expert about today.

Yep. So Keith Connolly is going to be joining us. Keith. As you said, Michelle, he's an expert. He has acquired 24 companies in the past 12 years, which we're going to hear some, some great tips, I think, ahead of us here. And Keith and I met many, many years ago and a couple of prior lives, so had the privilege of knowing him for some time. So looking forward to the conversation and we'll, we'll right in.

Today we're talking to Keith Conley. I am so excited for this one. So Keith is an M and A expert. He is president and founder of Conley Consulting, where he does advisory consulting for due diligence for M and A in the PE speculated space. Keith, welcome.

Hey, thank you. Good to be on. Yeah.

We're really excited to have you here today. I know Mark and I have really been looking forward to the conversation.

Yep. So. So, Keith, as we're getting started, let's kind of set the stage because you've had, you've had a very storied career. So we'd love to hear a little bit about the story in terms of how you got to what you're doing right now. Because you know, when you look at what you're doing, Keith, it's the kind of thing you go, everybody goes, wow, I'd like to be doing that, too. So I go, how do you get there? And tell us a little bit about, about the background story and how you're doing what you're doing.

Yeah, Well, I came out of undergrad with a degree in civil engineering and started with Bechtel building nuclear power plants. And I got into the project management side and liked the business. And I wasn't a very good design engineer. So I went back to grad school, got me MBA and then got into the management Consulting world with the Big Four and spent 15 years there working with many of the Fortune 20 around the world. It was just a tremendous experience to apply what you learned in business school and just get exposed to so many different industries and leaders and so forth. And then during the dot com era, I jumped into a software company running the professional services there. I then did a stench with NCR for eight years, helping them run their outsourced in business. And then I came across a private equity company that was working, had invested in a company called dti, which was legal services, outsourcing illegal services. And they had traditionally been copying and scanning and they were looking for an executive to come in to run their technology business, which at that time was electronic discovery with legal issues. So I came and we built a business from 60 million to 1.2 billion. Along the way, I became president over all the operating units and we made 24 acquisitions along the way, had four transactions with four different private equity firms. So now I found myself. I left a few years ago, and when I left, private equity firms started reaching out to me to provide assistance during the due diligence phase. We look at targets in the legal service area or software area. So for the last couple years, I've worked with about 16 private equity firms, helping them assess the risk, speaking to the target management team that they're looking to buy, helping them with valuations and an overall assessment of should they do this deal or not. And it's been a lot of fun. It's one thing when you're running a company and you're owned by a private equity company, but it's a lot more enjoyable to be working for a private equity company, owning the company.

Right, right. It's a lot more fun. Much, much better. It is a lot more fun.

So that's, that's what I've been doing for the last two years and have enjoyed it tremendously.

So, so one thing caught my ear. There are a lot of things called my ear, but one in particular, I see you said a DTI, you went from 60 million, is that right? To 1.2 billion. Right. That's incredible. And, and you go, well, how do you do that? Well, you have it a lot. You had a lot of acquisitions there. How do you. How much of that was acquisition growth? How much of that was organic? Was that part of the plan to get to that level through acquisitions? Kind of. What did it look like in terms of how you made such a huge jump?

Yeah, well, the private equity companies that invested in us over that 12 year period would assist us primarily, you know, besides strategic planning would be investments and roll ups. So it was an industry that was very accretive if you could buy companies at five or six times ebitda. So that was always the plan to have an acquisition strategy. In fact, we would acquire, we got the process down so good that we would acquire, then integrate quickly to get the synergies. And one of the challenges that private equity companies would have when they would evaluate us would be to try to tease out what was organic versus inorganic. Because when you integrate and you get the financials going, it's very difficult to measure organic. So originally we were growing about 20% top line organic, but after a while it becomes muddy and it's very difficult to measure the true organic nature given you're trying to integrate the companies quickly to capture those synergies.

Wow, tremendous feat. Well, so when you look at the market today, Michelle, you talked about the, the amount of M and A activity happening out there, which is unprecedented as where we sit right now, the way the economy is going, the market, et cetera. What's your general assessment of what the M and A market looks like right now? Say from the perspective of a private equity buyer or even the perspective of a company that's growing through acquisition, you know, acquiring other companies?

Well, from a private equity perspective, they're not having difficulty raising funds. I mean, you're talking about multi billion dollar funds. Historically the returns have been very, very healthy when you invest in private equity. So raising the capitals is not the problem. The challenge is trying to find businesses that are valued appropriately to invest in. Because the valuations today on these corporations, at least in technology, at our all time high, for example, software companies in the legal services industry are going for 25 times EBITDA, service companies 12 or 13 times EBITDA. So it's been difficult to really try to get some deals done due to the valuation. So they have a lot of money and having the money sit idle isn't helping their shareholders any. So they're taking more risk right now to deploy their money. Looking at alternative things like dentist roll ups and veterinarians and dermatologists. They're diversifying even more now to find areas to invest in. From an enterprise perspective, it's a great time to sell. Again, my experience has been more around the technology, but right now it's an all time high to sell your company and you never know about the certainty of the markets 3, 4, 5 years out when the exit would occur after you get bought. So it's a Great time. If you're looking or interested in selling your company just because of the valuations that you can achieve right now, it.

Sounds like a couple things are happening. One is there's the challenge of you saying take risk, which I interpret as the PEs are maybe having to pay more than they want to pay. And then there's the diversification. Okay. We're going to look in new areas, new places that we haven't looked at previously.

Exactly. Well, good summary.

So what would you say would be one of the top two or three reasons why the valuations are so high right now?

Well, at least in technology, you have really good track record of growth. Although Covid was episodic in nature. If you just take out the up and down of that, you have a lot of strong, predictable growth and the margins have improved over the years. So you have predictability and today you have more reoccurring revenue. A lot of the companies have really focused their business model on that versus transactions. So their businesses are stickier. Thus that's more attractive to a private equity company.

Okay, so that's going to lead us into, you know, impact to the sales organization. Now, as you know, Keith, what we do is sales effectiveness work here at Sales Globe, and we focus on, for M and A, the integration of the sales organization. So from your perspective, in the overall picture and view of a merger or acquisition, how important and how important is the role of the sales organization to the success of M and A work?

Well, it's certainly critical. I mean, I would summarize. There's three areas you have to get right for the forest acquisition to be successful. Number one would be you gotta maintain the revenue of the targeted company. Right. If that revenue erodes, your whole business case goes sideways and all the synergy you take out are easily evaporated. So at a minimum, you need to maintain the revenue. The second is you got to maintain your top talent. And I've always focused on sales and project management being your top talent. So you put together plans to secure that. Because I recall in one acquisition we lost the top five salespeople that were the hunters on the first week after the acquisition. That, you know, dramatically didn't have a huge impact near term because we were able to surround those clients and there was some overlap. But in the medium term we felt the impact because there's not a lot of hunters out there. Truly. And then the third would be just to at least meet your synergies, if not exceed your synergies. Right. But when you look at synergies and overlaps. I have always been very careful about taking a lot of or planned synergies in the sales team. There's a lot of consternation going on, comp plans, roles and so forth. Territory planning. And it's just not an area that it's worth trying to get the synergies early on in the sales at least for people touching the client. Right. Anyone touching the client, you really don't want want to touch those people, you know, for a while, keep them in place, maintain client continuity. Right. You may have overlap with some sales leaders or inside sales and so forth. But the third thing is anything that any salesperson touching your client tread very careful. And I just think that's not the place to count on synergies short term. I mean they'll flush themselves out the territory planning the change in comp plans eventually and you'll have some people, you know, leave voluntary or unvolunt military. But I've always been very judicious and not trying to have a lot of synergies in the sales area the first year.

That is such really great advice. So you, you basically you said three things which are the first two much easier said than done. And the third you can deal with some other pressures like from the board. Right. When you start talking about those synergies. But the first thing you said was maintaining the revenue of the targeted company. So you bought that company for a reason. You want to make sure none of that particular revenue erodes or goes to the competitor, whatever happens there. Second thing you said was making sure that you keep your top talent. And then thirdly, making sure that you're able to keep your synergies and exceed them, but leave the sales organization alone as far as those synergy expectations, at least in the early days or for customer facing roles. Now I want to follow that up with a question. So we did a recent survey that had over 600 companies that responded and half of them had been involved in an acquisition over the last 12 months. And we asked them what were the biggest challenges that they had. And we had like seven or eight. But the top three were and I want to hear your feedback. The one was integrating the sales organization, integrating the two teams. The other was getting alignment across an overall go to market plan, which that sounds like so big. Right. Another thing was the role definition. So just making sure that your teams have alignment on the roles and how they're defined. I'll give you a simple example of that because that was a big one for, for our clients inside sales at Company A may be doing and behaving very differently than company B. One could be entry level, a way to get into field sales. Another might be a professional of its own. And then finally cross selling. And I'm sorry, there is one more incentive comp.

Yeah, cross selling is an elusive one. Yeah, I've always found that to be the most difficult. Every time we did a transaction to different PE company we had five different business units and they would say, oh boy, if we could just cross sell more. Cross sell more. Boy, spent a lot of energy on it. We measured it, we compensated it. But I'll tell you, that's probably the most difficult one. The three that come to mind to me and those all resonate, they're all real issues. But number one is the compliance. Right. You know, they're likely to be very different. And comp plans speak a lot about culture of the organization. Right. We bought one company and their comp plan was such that no salesperson could make more than their CEO. And we always viewed it as we, if we have a salesperson that makes more than their CEO, you know, assuming that the right incentives are in place. That's awesome. Right. So the comp plan is an area that you need to tread, you don't need to rush that one. Right. There's a lot of complexity there, you know, that can demotivate the sales team. Right. And we would typically you have to look at your cost of sales. But we, we be very intentional on the comp plans but not rush it. The second area is the territory, planning realignment. Again, that is not an area to rush. Right. You're going to have some obvious, most likely overlap in some accounts and so forth. Right. Maybe the same decision maker or not. But there's just a lot of anxiety around territory planning. And I think we've always treaded lightly on that and intentionally and just communicate a lot. And the third is what you talked about is the alignment of the rules. You know, an account manager, one company might be very reactive in. An account manager in our company was a quota based farmer that drove growth year over year, 20%. So in the role definition, especially in our merger, it can cause a lot of consternation that really has to be thought out. Well, so those are the three that I always think to. Even though the president of the company, I was involved heavily in all those decisions as we acquired companies. Just knowing if you weren't, if those weren't addressed correctly and appropriately, you're going to have some problems. Involuntary attrition, you know, on the Point.

On cross selling, Keith, I could see you were thinking a bit about that and you said you tried it so many times. I'm wondering what is it that you found that makes cross selling so challenging? Because it is kind of the obvious big benefit. It's like, well, we just cross sell. We're going to be able to get all these, these extra benefits. But what are the, what are the challenge points that you see with that?

You know, I think it has a lot to do with turf, right? So, for example, a sales rep being very successful, making maybe a million dollars a year, right? And you say, hey, we bought this company. There's other services we can pull in. Here's the compensation plan. And they're like, well, I don't know if those guys can deliver that. Why would I want to risk my million dollars and bring in a service line that, you know, I don't know how good the service is and so forth? So it's the risk that many in territory turf that I found at the end of the day is the hardest thing to break down. You think compensation comp plans for cross selling in itself, and we put some really attractive compensation plans together for cross selling would be enough for the inertia, but it wasn't. And if I had to do it all over again, we never had a chief revenue officer. And when you have different lines of businesses, it really goes up to the president and you become the chief revenue officer, right? So I was driving a comp plans discussion across five different sales executives and, you know, try and get them to work together. But having a chief revenue officer, I mean, you got to be a certain size. But that, you know, their goal is to cross sell, to align things across all the different business units. That's something we never had at epic. And if I had to do it all over again, I would put that in place because that, that could have been a big driver of bringing things together and breaking down some of these barriers.

So it's. So when you talk about behavioral motivators, you think the comp plan is going to motivate people to do certain things, but the bigger motivator is actually the avoidance of risk. If people are at a certain compensation level, I'm more motivated to not mess things up than I am to try to make a few extra dollars possibly and put it at risk at the.

End of the day. Because I would go on these sales calls and I'd bring in, I'd try to say, why is this right? Because we married went from like 4% cross selling to 7%. But it sounds like a big percent increase, but it's around here in the big scheme of things. And that was what I found out personally. And, you know, even in consulting, I did a lot of cross, you know, when I was a manager, consulting in sales. And it's easy to lay out the plans, but it's just really one of the most difficult things to execute in a company.

All right, So I want to ask for, maybe if you have anything in your head, for any examples, kind of the blood and guts stories, like anything that's happened, you go, man, this is like something I saw that it was a pitfall I would avoid at all costs or something to watch out for. And you don't have to name names or anything, Keith. But I'm just kind of interested because you've seen a lot of action. Like, what are some of the bigger mistakes that you've seen happen?

Well, in smaller acquisitions, right? And when you're acquiring a company, you're imposing your vision, mission, values, existing common plans. Right. Processes and so forth. When you're acquiring a company, imposing that, it's less risky, in my opinion. But we've run into issues. As I mentioned before, when you get good at integration, you have speed and velocity, you integrate quickly. And with smaller companies, we had earnouts, so someone that ran a company, we would pay them out one third of the valuation next year, third, the next year's third to keep the business going. And they're heading. And when you integrate a company quickly, you start losing that P and L focus. And so they had a P and L before, and all of a sudden you bought them to integrate and to sell those services or offerings throughout your whole company. So, you know, we got into a lot of legal issues with some of the owners that we bought businesses from because we couldn't measure that earn out as effectively. And you get into negotiation what that would look like and so forth. We gave them the benefit of the doubt. But that is just. That's one of the things earn outs is if. If you're going to keep them separate and measure as separate P. Now you're not going to get the benefit as much, but that's easier. But if you integrate these companies, you just have to watch out on the earn earn out front. Because we have had a few litigation issues that come about.

So. So basically the playing field or the game changes a bit. So at the beginning, when you're doing the acquisition, it's like, here's what we want you to do. That's all really Clear. Because we have control over it. We can handle those things. We've done it before. And then everything starts to come together and the game changes and then it gets harder to measure.

Yeah. And measure that specific business that you caught because you're integrating, you're leveraging those resources across other areas because of their expertise and so forth. It's good overall for the business. But if you are being acquired and you're expecting this payout every a third every year, it can be complicated. So that's one of the risks.

And any other watch outs for, for people that kind of things that you've learned through experience.

You know, the sales area. What I've learned is like there is a role for the executives when it comes to sales during these acquisitions.

Right.

And an executive needs to be proactive, engaging, like I would be on the calls of the top clients of the company they were acquiring to speak through it. And still due diligence. We're asking questions about, you know, the. We're letting them know we're buying this company and. But then we're finding out a little bit more about, you know, their business and how much revenue we might get over the next year or so forth. But, you know, it's engagement, the executives, you know, going out there, going on a call with your sales team. I would call my top salespeople every month. Right. And I would send out notes to people that had, you know, exceeded their quota for the month. Right. But just I think really getting in touch with that company you just acquired, participating it and learning firsthand at the beginning what the challenges are because you have the resources to, to address some of these systemic issues. And if you always rely upon two or three layers below in a major acquisition, it might be a missed opportunity. So you don't want to be micromanaging. But at the beginning, you can communicate your values, your mission with these people. You're out in the sales call, you're meeting clients. Right. And learning about the clients. And then you're hearing the salespeople talk and understanding what challenges they have. Then you can kind of bring that back, look for the systemic issues and drive some change on behalf of there to help help those sales reps and just overall help them become better as they come into the country.

Yeah, yeah. Staying close to the action.

You know, Keith, I think that's probably one of the best pieces of advice that we could give a sales leader. I'll tell you from our own experience. So many things that we see if a leader doesn't have all the Answers. Sometimes they say nothing and then all of a sudden they're being flooded with churn that they didn't want from the top sales people from the company that they're acquiring in a water cooler. Talk. It just happens if you're not leading the conversation. And that's one of the first things that we tell, that we talk to sales leaders about is just get out there regardless of what you, you know, what the message is. They just want to hear something from you and understand like what's ahead. What other advice would you give sales leaders? And then I'm going to follow up something about cross sell because it's a big pain point. What other advice would you give a sales leader that you know? Now here they are, right? They've, they've been given the charge of you got a new company that's coming in and here are the expectations from the board. You didn't have any say on what that was going to look like or the quotas or anything. What advice would you give the sales leader as he or she is taking on that new role?

Well, one is kind of role modeling, not becoming internally focused. All this stuff is going on, people are worried about they have a job and so forth. Role modeling, your discussions about the client first is extremely important because as you mentioned, the politics and so forth. If the sales leader isn't role modeling, that a lot of stuff can internally you start taking the eye off the ball. The second is, you know, they're going to participate but don't rush the comp plans and territory planning. Right. And then the third is just overall communication. Like we would have our sales lead, we'd give them extra money to physically get the sales reps together, right? Monthly basis initially and then quarterly basis and then it went back to normal. And that's an investment, you know, sales rep flying in from all over the place. But that's just an opportunity to really communicate where you are, what's going on. Get a lot of Q and A, build the team stuff. So I would say make that an investment in getting your teams physically together to get to know each other.

I remember one global sales leader, we were doing an acquisition for the integration of the sales organization and he went, I mean it was a global company, multibillion dollar. And he went into all the different locations and he would wear a costume. It was really kind of funny. He dressed up as Big Bird for one. And nobody knew who was coming in. And it was their, their CRO. And he would walk in and we would hear, you know, about this after, but it really broke the ice and you know, let them know a little bit about this person and his individual style. But you know, I'm not saying everybody has to wear a costume, but making that personal connection and getting out there, I would agree with you, is really key.

Yeah. And I also saw this one sales rep when he pulled this meeting together, he brought in one of their top clients and the client spoke about what it's like to be a client of Epic and they like what their challenges are. Like these multi touch points. Sometimes they get a little confused solution. Architect or sales rep. Right. It was really interesting. It's just, it was a great idea and yet to have a certain level of client relationship, to have someone come in and be that honest. But I wish we had filmed that if we could. But that's just an example of a really good leadership move to again, try to make things client centric and client focused and not get the internal consternation, you know, swimming.

Yep. So I want to bring you back to cross sell for a minute if I, if I could. Because we do find it's one of the biggest challenges. And you know what, you're right. What we see day in and day out is we'll go in and we find out that the cross sell synergies are. The cross sell expectations aren't there. And we could tell you for a fact, we know over 90% of companies that acquire another one. 90% of the cross sell expectations do not occur. We do know that in 90% of the cases. So you already discussed some of the mistakes that we've seen is, oh, they'll spiff it to death. We had one that was they were even giving a car. I mean, we have seen so much for just a month. Right. I'm sure you have seen a lot more than we have.

We did a Porsche, we leased a Porsche for two years, brought him down to Atlanta to drive in the Porsche track.

Oh my God. So it doesn't matter. Right. So, you know, and I, I agree with you that a lot. Oh. And then I, I had another one. This would be more like a stick, but they didn't extend expected to be a stick. So they want to cross sell and they had legacy products. But the solution was we're going to create a threshold to pay for everything so you won't get upside or any decent pay on your core products until you hit a certain level of expectation on cross sell. Well, guess what? Their top performers started. They were blowing it out of the water with their, you know, traditional Products and services and weren't earning anything and they started to leave. That was a panicked call that we got that one time. So when you think about that and we realize the importance that salespeople have with their client, their relationships, their revenue. Right. What advice would you give sales leaders on first steps to take when they're thinking about cross sell?

Well, I think the more comfortable a sales rep is, is with the service offerings that they're supposed to cross sell and the people associated with those services, the better off they are. Right. Versus some marketing stick with some PowerPoints and so forth. I mean, have them understand if they're solution architects or pre sales people in there, you know, get them working with the sales reps and educating them on this and getting comfortable with the solution. So their perceived initial risk of what this could do to my existing revenue can be reduced. Right. I found that to be fairly effective. Not for all, but for many. You know, that education of those other services that they want them to pull through. Because I think as senior executives, you kind of, I mean you see all these services and you kind of think, why aren't they doing this? And then you go out and you speak to the rep and they don't really understand the service that well. And that's what contributes to why they feel there's risk there. So that education, ongoing education, not an event, but the ongoing education of these services and case studies, you can share in the wins that occur. Hey, you know, Sally just sold this and let's talk about how she did a new. I think is very positive and can help the cause.

Yeah. You know, to that point, Keith, Michelle, There was a recent situation where it was a client. There were, there was, there was an acquisition they had made. They were trying to get cross sell to happen. And the core reps perceived that bringing in this other organization actually slowed down the sales process.

Yeah.

And made it more complicated when in fact it, it could accelerate it and it could make retention better. But it was just a misperception. And, and communications was a big issue because they had, they had unfortunately, turnover in the sales organization. They had new people, so they were, they weren't getting the same messaging as well.

That's one of the biggest challenges as you get larger. I mean the things about when you're small, you're nimble, you can make decisions quickly, but the larger you get, there's more layers of communication, there's more protocols. If you're public, there's more things. And that's the most difficult thing is how do you not Lose what made you so successful, especially as a salesperson, can get something approved like this versus having to go through your CFO and committee and it takes you days, if not a week to get approval. That has been probably one of the things I would always focus on and look for client feedback on this area as well. But that's one of the biggest challenges. How do you stay nimble? Balance the ability to be nimble versus the process that you have to have in place or processes when you get larger. And how do you balance those two is a challenge. Salespeople are at the end of that, right?

Yeah.

So Keith, we use the word or the words merger and acquisition, M and A and we just kind of use them together. But there's a big difference between doing an acquisition and doing a merger. Which of those do you think is the better approach?

Yes, there's different risks associated with those two models. If you're doing a merger, which means that you're creating a new company, I mean like SunTrust and BB&T, very different cultures. BNBT, very decentralized local cities. SunTrust or Regions bank, it's one of those two much more hierarchical, corporate, very different cultures. And they create a truist as a new company. And we did the same thing when DTI bought epic. We merged together. So you're creating a new vision, mission, set of values. Then you have to determine what processes in the company that you use, the hiring processes. It's easy to say you take best practices, but then you have an integrated leadership team and who's determine what's best practice. Well, the best practice is the one I'm used to. Other person. Well, no, no, it's my process. And so conceptually take the best practice is great, but politically right and people are kind of stuck in the ways and you have to rebrand yourself and so forth. So I have found, I went through that dti, we bought a public company, brought them private and chose the merge. And we had a blended leadership team and we tried to blend things as much as we could. But when you do that, one, it takes a lot longer. Two, your attrition early on will likely be less. But in the long term it's about the same. If you acquire and impose your processes, vision, missions and values, the voluntary attrition will be a little bit greater, but it's faster and it's less risk. Right. So I think look at other case studies and you know the bell self at&t and so forth, when you have these mergers, it is harder and it's Riskier. So if you have a choice, my experience, be one or the other buys the company. And not that you can't tweak things, but you try to apply the existing vision, mission values and don't work all that and just have the other company adopt that and move on and you can do it with some velocity there and you can get back to focusing on clients a lot quicker than having your executive leadership team in off site meetings thinking through what the mission is and what your new values are. That merger can be very distracting to the senior leadership team and take you away from being focused on clients. So that's been my experience. There's certainly cases where it makes sense, but all things being equal, the risk is a lot less when you acquire.

A company, I would think it's a big challenge with the client as well. Right. So if you've got that merger situation, I think there's a lot more question as to who's serving me now and how are things changing as opposed to when you've got that acquisition, you've still got messaging for the clients of the company that you acquired. However, I would think it's a little easier, particularly with bigger companies because you know what they stand for, their mission, vision.

Yeah.

Because when you're doing the merger, it's two fairly good sized companies coming together. And you know, I was on the calls with the clients of both companies ahead of time announcing these changes and you always say that hey, we're not going to change your account manager and we're going to keep the people that have been supporting you in place. And they go, well, you have two salespeople that have been supporting my company now like how are you going to deal with that?

Yeah.

So there are greater complexities there when you do that for sure.

So let's talk a little bit about culture. We can. Because you did touch upon that and I think it's a really important one that that came up actually this year in our survey mark as one of the top challenges in. It's interesting because we run this question around M and A. We run it year over year and culture came out as even more important this go around as being a top concern. So talk to us a little bit about, you know, you've got two companies that. Well, first of all, when you acquire a company, let's use that example, does the culture even come into play as part of due diligence? And I think I probably know the answer to that. And then when you've acquired that company and you've got two Fairly different cultures. Like how do you really. What's the most successful way to bring them into one?

Yeah, I mean, I remember as a management consultant we talk about culture and how important it was, but when you run companies and you buy companies, you realize it's just not a saying. It is the glue. And if you don't address it, the probability of success of that acquisition is going to go down very low. Because what is culture? It's the beliefs and the values that your top leaders exhibit. Not what they say, what they exhibit, how they walk the talk. And you know, when you're buying another company, their culture likely is different. But if it's very different, then you know that the integration from a change management perspective is going to have to be much more significant. If you don't want a lot of voluntary turnover now, sometimes you may want it, you know, capture additional synergies. You're buying them for their software or something. But in general, understanding the culture and how you integrate the companies is really, really important. If you're buying a company and they're smaller than you are, then you oppose your culture. That's easier. Here are values. This is how we operate. This is our norms, this is how our leaders behave. And you know, you'll find out fairly quickly who's on board and who's not. And the ones who are not on board, you know, you need to get rid of because they'll become cancers in your organization. Right. So you got to do that fairly quickly, early on to help stabilize it from a culture perspective. Right. But it is extremely important. And in the due diligence perspectives, you know, as you're talking to the target management team and you know how they do business, you get a good feel for what you're dealing with and what the challenges are going to be. So you just have to be very, very intentional and try to bring people along and explain your culture. And this is who we are and this is how we operate. And this is who we are. Right. And if this isn't for you, understand this is our core values, this is how we operate. We want to bring you on here, but if this isn't the right place for you and so forth. Understood. Will help you with an exit. And that's typically how we, we've handled that. But yeah, if you don't get the culture correct, you're going to have a really difficult time.

You know, Keith, one of the I, I don't want to miss what you said there because I think that's really important. And what you said was very quickly having the company understand that's being acquired, what your culture is, your beliefs, your vision. What we have found is that a lot of companies will say, you know, they'll talk to us and say, okay, we're just not going to go there. We're going to leave them alone for now. Just let them run as is and, you know, just leave it be and let things settle down. And you know, we're called and you know, I'm speaking about clients that we've talked to or colleagues out there and they're failing those acquisitions. And you know, they. They believe they're doing the right thing by just letting things go. You know, my belief has always been. I'd like to. It sounds like your belief, but I'd like to hear that is it doesn't matter what the message is, as long as the message is clear. I think people just want to understand what's ahead and what your beliefs are. And we believe. I think Mark believes this too. I think you do that the leaders that aren't clear are the ones that will really lose out in the end, you know, regardless of your position during M and A or anything else.

Yeah, I mean, I think it's that clarity of leadership, as you said, Keith, which is really the, the tricky part. It's what they demonstrate. It's what they do. Right. And, and I think you're right, Michelle. People are looking for clarity. I mean, we've just been through this entire change over the past couple of years and people are looking for clarity. They're leaders. Right. And so, yeah, so M and A, I think, same thing, clarity. But Keith will let you comment on it because we're kind of like sort of answering the question.

You know, we did 24 acquisitions, so we got good at acquisitions.

Yeah.

We got this process in place where myself or someone, my executive team would fly out on the day of close the day one, and meet with the entire company and have videos and so forth. And we would lay out why we bottom, how we're going to operate together, what our values are, how we view our employees. We would say there's some redundancy. Right. And you'll know by the end of today whether you have a job or not. Right. Because we just learned pulling off the band aid is it's just a better process. And you know, everyone know by end of the day, right. We would talk about the name change. Right. In 90 days, everything was going to be, you know, this name and just lay it all out. And then we'd have all hands Calls every week. And then we'd have Q&As going out every other day right. To the company, because all these questions coming up about policies and this and that. So we got really good at that. But it was the engagement early on by the senior executive team in that company, small or large, we would treat it the same way. And then you just had to walk the talk.

Yeah. So you're really talking about a process, a campaign. It's a method that you follow. It's, it's quick, it's clear.

Yeah.

And we're big proponents of that idea of the campaign, of the process.

And, and I'm unfortunately a big advocate of ripping the band aid off. I do it all the time around here. But I'm like you. I think you just gotta be straight up, you know, and truthful and let people know kind of what's ahead. And I, I, I would agree with you on that. I, I really appreciate that advice about dealing with those things early on. Because we see too many companies set back and what they'll tell us is they've gone through multiple acquisitions, very similar to what you're Saying about the 24 companies, some of them small, and they've let them operate, you know, as they have been and haven't integrated them, and then suddenly they're having issues with scale, suddenly they're not getting efficiency, suddenly they're not getting the revenue that they had expected and things go south. Then they want to integrate everything. And they're dealing with a much larger cultural and change management issue because some of these companies have operated fairly independently for a long time.

Yeah. Our philosophy is always integrate. Right. You know, be careful on the sales side. But that's just one aspect. But the processes and so forth, integrate organizationally. Integrate. Right.

I got to agree with you on that one. Okay, well, I've agreed with you on everything. So. Okay, let's talk about this. I'm going to flip it around because I keep talking about sales. So let's just talk about, you know, when you're deciding to buy a company. You just said there's a lot of money out there. PE firms are looking into alternative industries and businesses like the dentistry. And you're right. We're seeing this ourselves. We're getting calls on veterinarians and all this other stuff where there's a lot of M and A going on that wasn't, you know, just a couple of years ago. So they're being creative about that. But, you know, what are some of the key things that you would say are most important to think about when you know you're, you're acquiring another company. Now, I know that some of these PE firms, they all know what they're doing, right. But even sales leaders, I think would be interested to know when do you just say no? Like run forest run? Yeah, like when do you just do that?

Well, from a sales perspective, which is a very important due diligence, right. The first thing I always look at is do we have any client concentration in this business is number one. Because if there is, that exponentially increases the risk, right. If you have one client that's 50% of your business and they walk away. So that's number one. The other is, and I've learned this over time, is truly understand what's in the booking and the backlog of these businesses. We bought a business and we, you know, as you're more in the due diligence, you're learning more and more and getting peeling the onion. And we realized internationally they were at a peak. And when I did this call with their top client in Germany, right. I learned that the big concentration client over there was going to start winding down, but the forecast didn't reflect that. Right. So understanding really what's baked in and how much risk there is, we would look at clients run rates, you know, historical, and just see and try to understand, you know, and come up with our own image and dependent forecast versus what they gave us. Since oftentimes it's a hockey stick. And then to the extent where there's account overlap, you know, just have a plan of how you plan to address that. Right. Because it's pretty obvious you have the client list and so forth. And don't wait until after you've announced it to try to figure it out. Develop doesn't mean you have to execute against them, but develop the plan early on. If you have a lot of overlap of sales reps in a territory or even worse at a client, you've done this enough, there's a process to address that. Start the planning process before the acquisition actually occurs because that will help reduce the risk as well.

And I heard you say, Keith in a separate conversation, don't be afraid to walk away. Don't get so caught up in the momentum. Because I think when you're doing a deal, you know, the, the, the momentum is that you want to make it happen, right? So don't, I think you said something like don't be afraid to walk away at the last minute or something to that effect.

Well, what happens, especially larger deals, are you're spending millions of dollars legal fees. Yeah, right. And investment advisors, investment bankers, consultants. Right. That are being brought into the private equity companies. And there's a lot of sunk cost. And I recall one acquisition where when we really understood this financials at the very, very end, right before we signed the contract and did the deal and we kind of wanted to back out and the private equity company who was selling, who was helping us buy this, said, listen, we spent so much money on this. Right. Let's just get it over the goal line now and see if we can make it, make it happen. And you know, that was good example. Less learned for us as a leadership team because in hindsight we should not have done the deal. Right, because you're learning and learning, learning all the way up until you sign that paper. So I guess learning fear is it's never too late to say no.

Right?

And don't. Those are some costs, you know, that's how you have to treat those. Just because you've made millions of dollars of legal spend, investment banking fees and so forth, that shouldn't be a determination whether you go forward or not. You should be able to say no at any point, even at the very, very end. And that's kind of a lesson learned there.

So that's a great piece of advice. I mean, that's one of the core lessons I remember for business school was, you know, don't make decisions based on the sunk cost. And for some reason that kept coming back and back over the years. So, Keith, last question. If you had, you know, just a few seconds with an executive and they were saying, hey, you know, Keith, we're looking at, you know, we're growing through acquisition. That's our plan. What one piece of advice would you give them if you only had a few seconds to tell them something that might, might help them?

You know, I would tell them to get out and meet the new clients and to get out and go on sales calls with sales reps. Now, I'm not saying a sales manager, maybe he's in the meeting or she's in the meeting, but to really engage with your clients that your new clients and with your sales reps, the people that are touching your clients, that's what I would say. And it's not an event, it's an ongoing process. As I mentioned, I would call it my top sales reps every month, but just to really get out there and understand firsthand what the challenges are that this new sales team is facing. And as an executive, you have the resources more than likely you're accountable to make some of the systemic changes. Then you can go back to the sales team, say, I heard what you said out there and it was new. We're going to fix these three things. And by the way, I already fixed one of them. Right. So they're thinking that, hey, someone at the top is spending their time. They're coming out with me, meeting me, meeting my clients, and they're actually listening to me and actually addressing some of the systemic issues. I see. That would be the recommendation that I made because the learnings out there, because everything else is. You have layers of communication. It's getting filtered and so forth. When you're in a meeting with the sales rep, with their client or prospect, there's so much learning. It's just. So that would be my recommendation when it comes to the acquiring company and what the executives.

It's all about the customer in the end.

Yeah, it is.

Really is.

Darn. I thought it was about me, but okay. So anyway, this has been super fun. Thank you so much. I could talk to you forever on this one. Maybe you'll grant us your presence on another podcast with us. But Keith Conley, tell people how they can get a hold of you if they would, if they would like to do so. I know you're on LinkedIn.

Yeah, LinkedIn would be great. Or my email is kconley777mail.com.

Okay, 777. That sounds like his garage door code. I don't know. Anyway, okay, well, thank you so much for spending time with us here today. It was really great. I really appreciate it. You're someone I highly respect. So thank you. And thank you to all of our subscribers here. If you have enjoyed today's session, please share with your family, friends, colleagues, everyone you know. Connect with Mark and I on LinkedIn. We're always looking for followers. We're always competing to see who has the most. So anyway, who's competing? I know, right? Anyway, thank you again, Keith.

Thanks, Keith.

Been a pleasure.

Thank you guys.

See you all the next time.