20 Episode results for "M. A."
Virtual Summit Recap: The Future of M&A
"Hello, I'm a friend's this podcast is brought to you by building is coming back. Would you like to avoid wasting hundreds of hours managing XL traffic and building and replies. Do you want to make a post more efficient line are brings you noodles and the same time it is an improved preparations. He realized she can learn more at home. Net. Here's the deal. That was my lovely daughter Sheila. If you want to keep up with the latest on m&a science our live streams networking events, when we release new resources visit am a science, and subscribe to our newsletter. You can also follow our LinkedIn page to catch highlights of our interviews. And if you like our content please e l a friend so we can keep growing our community of forward-thinking m&a practitioners the HRM a round tables annual conference has gone virtual for 2020 this world class of birth and focuses on one of the hardest parts of m&a the human side join me in a great lineup of expert practitioners as we share how to deliver a transaction value through the people leadership and culture elements of a deal. You can save 10% on your registration when you visit em and a round table, and use the discount code. It's now on to the interview. I'm key Sam Patel and you're listening to m&a signs where we talked with deal professionals and learned valuable lessons from their experience this podcast focuses on stories strategies and what actually happened during m&a deals. This interview is a rewind from our virtual Summit. Hope you enjoy it. If you want to see the full version with video visit em a science. Welcome everybody today. I'm here with Dr. Carl pop senior director of corporate development and sap Carl is a board member of the German Association for post-merger integration with a member of the German Association for mergers and Acquisitions and shares the program Committee of the European workshop on merger integration today are talk is about the future of m&a. We should be discussing what tasks are automatable in them in a process feeling good about this. Yeah, absolutely sort of my most-loved topics. And again, thank you for having me. I think it's a great way to keep their experiences and best practices. I love it. If you want to kick off. Could you briefly describe your role in sap? Yeah. So I'm part of the corporate development team at sap headquartered here are close to Heidelberg in Germany, and I'm running productivity elections and postmarks integration projects, and I'm also working on the definition of the m&a club. Says that we use it as a so first question. What is the future of m&a? Yeah, I think the future of m&a something that's a lot different of what we see today. I will play a major part in message changes that will see a lot of the I would say annoying craftsmanship that you will see that they will be gone by software automatics and robots. So we'll have much more time to focus on communicating risk solving problems planning integration and such. How do you convert off automating m&a so I work at a software company and I see a lot of great Innovation around me with Predictive Analytics natural language processing machine learning robotic process automation all the passwords. I see live happening around me and I go back to my workplace and there's nothing of it and that kept annoying me. So I started to age Work on automation of everyday processes where areas of m&a you specifically look at for automating. We basically look at the end-to-end m&a process is so from very early strategy to closing the integration project. I've also created a new book which will be out in German at the beginning of July and in English at the end of July talking about what other tasks and m&a process. How can they be automated which data are used and that could be a basis for the automation. When you look at that ability to automate some of these tasks are there areas that you think are generally easier than others to sort of starting points. Yeah. Absolutely. They are the best starting point is a data Lake where you put some automation on top and basically you could think of data Lake like the data room and their companies out there who already offer certain automation on top of data roam Open source analysis of documents analytics Etc. So that's the typical starting point where you have lots of data and can easily start to apply of the household machine learning analytics and other tools. What's the time frame? Do you see this? Cuz we're starting to see there's data rooms and you starting to see the legal industry using contract analysis tools, but there seems to be a pretty big gap from that era to the regular practitioner that's coming in and typically doing diligence. What kind of timeline are are you seeing before? We see a big shift in this area. I think it'll take another two to three years not longer because competition will drive the technology forward. I would say the the competition for just doing a better job or accurate to diligence based on this automation that you can use examples in the software business are automatic tools to analyze licenses of open birth. Components and even pools who can do things that only architect could do which is based on source code analyzed the architecture of software products is a lot of innovation happening. I think the key hurdle we have today is bringing all of that together because in the end of end automation, you don't want to have islands of information everywhere. You want to have a joint spaces to integrate all the automation that is available and that will take some time the races owner. I would say it's just rough estimate. We looking at a five year tenure 20 or timeline. I've been a scientist. So I would say it's more like a guesstimate. Let's say three to five years from now will be a different game with a lot more automation when you talk about like creating a data Lake out of the data room and starting to do some of these more of the automated analysis. Can this actual data a change the m&a approach itself wage? Absolutely. Yes, so I believe it will be a shift of the human capacity in imitate processes away from searching and analyzing in that mitigating taking decisions Etc. If you look at other parts of automated say you have a full weeks of the diligence and usually way through two and half maybe three months wait for the results of the legal analysis from the legal advisers. You could have a draft version based on automated analysis today already on a daily to home was the major risks automatically found and then with the whole different game you have almost four weeks instead of 1 and 1/2 Weeks assume that you have all the documents at the beginning of the intelligence. It's a completely different thing that we are working into. I'm curious if we can define automating a task because are we looking at some of the contract analysis tools essentially give humor? Is the superpowers to really be able to be more productive maybe if you can just share your approach to automating processes and m&a the area of analysis and even construction of legal documents is an area where we are very far advanced in applying modern Technology's so there are fools out there who can really do a very fact automated analysis and identify certain risks. I would say but also certain things that you're looking for search machine learning in other things. They are also towards out there who can summarize contract if you have one contract and you have a hundred amendments that changed the conflict basically summarized that and show you a quote unquote on existing contract and it creates need it has all the valid Clauses that are active today and that's a huge jump in productivity that will shift everything we do. They are in a similar balances in other dog. As well. So for example, you could imagine that you have a data room and you basically asked the data room and intelligent assistant or the questions you have and it it answers based on the information the data what you do so there's unlimited opportunity there. If you look at the automated ability, you could basically look at the tasks and then see what other different activities in this page look at each and every activity there and say is it automated or not many decisions support but also decision tasks can be automated today. So that's just a huge thing that in the industrial wave of factory automation. We had a hundred years ago the work of the quote unquote normal worker was impacted not always machine learning is more like a vertical automation progress that we have. So even highly sophisticated tasks could be easily supported improved with age. A technology. Can you tell me about some of the tools that can help it's hard to get an overview right now what tools out there? So one thing that's definitely missing is transparency on which tool available for which tasks and how do they compare today? Every practitioner would have to go get all the tools out there and then find his own decision Matrix and then decision that's a very tedious task what we need and you mentioned that and you run this community as an exchange of information of experiences just feedback from using things like conflict analysis or analytics or natural language processing of documents in the data room and share it in the community. So in Germany, we have a very active Community with several working groups and specific topics regarding automation since about two months. We also publish some of the results also an English language from the phone number. Association of m&a in our magazine which is called m&a ramble on the website M A Midas review. We could have a look there. It's a running discussion should be applications Etc. Yeah, that's actually really interesting how you have the network and you're sharing some of these ideas with m&a science. The initiator was the fact that all these drug companies have their own approach and I really focus on a lot of the people challenges that seems to be some of the most difficult things to really solve. I don't think you could automate that stuff. I think there are certain things where we look at maybe more of the Box activities like bear. Hey, we're looking for some pretty obvious things that are essentially the Doomsday tomorrow type of risk and hey, we got tons and tons of employment contracts customer contracts to really suck lies and look for the variances which may identify other risks the human the human part. We still have to do that and I think that's been the area of focusing around the practices there, but it's also certainly let's say you have in fact Since you have a question, something seems to be questionable. What's happening around the customer. Let's take a fantasy name, like for example, and you say hey this customer Porsche what's cooking and you should talk to the person at the Target company even in this situation. You could have support from a tool that shows all the relationships around this entity that bush and all the information we have in the data room to give you a background without having to look through their hundred thousand documents in the data room found this customer Bush and his complaints for example, when drilling deeper into this topic so clearly person to person is important but it's also augmenting and assisting in using all the data in the data room. That was single person is not able to capture as a home. Yeah. That's actually interesting view when you look at Autumn page. And where are the essential goals out of that? The perfect automation would be basically two things you have an end-to-end platform or data integration layer. You would have a job opportunity to plug in different specific tools for specific tasks into that and you're able to apply all the magic that we talked about evil. And also coupling data from different phases in the m&a process go back and forth and use the capability to not only compute but also analyzed interpret large amounts of data to ensure you're basically cutting out a lot of the Tactical craps. So people can focus more on the high-value activities actually create value. Absolutely. Have you seen my interest in this or are people pretty satisfied with their current structure? Yeah. There's a lot of interest in this the key thing that keeps people in m&a and Cooperative off. Documents from rapidly adopting tools is it takes time to get a little more transparency? What's cooking in the market and also some time to prep bullet proof that the solution is really the right one to use for screening or other activities and m&a process and there's lots of screening tools out there with lots of automation but not hard to figure out today without having time to try ten different solutions. What's the right solution for you? And this is where we need to put in some work and share experiences this information to have an easier time to select Solutions which are right for the tasks that you want to automate. I'm curious if maybe some of the most recent things you've worked on that you see some pretty early signs that you're hopeful around. I think that we will see widespread use of specialized end-to-end m&a project management platforms home. Which are with always all the data room, but they basically run from a let's say portfolio management strategy screening all the way through the integration either the data will provide us kind of fan out in the other phases or specialized project management system providers will provide that Slayer and would need to plug in both rooms that's already there. And that's a good starting point to further specialized automation tools, like for example legal analysis of contracts that data roam. It's also already there. So a lot of good stuff that's interesting. I think got a good point where there's always that Central repository of information, but then extension comes in forms of a wage is to really be able to plug that in and and Central we're starting to see that but then I think that also enables independency of companies to really focus on Niche technology, but then still bring it back. Into that essential platform Kia basically to know what are the data? I need in different phases for example in screening to compare different companies cetera and then apply off everything on top of that faced on a quote unquote standardized API model. So that's where we should be going. Hopefully in the advisor more challenging to integrate the businesses post office day and activities involved in the course of preeminent. That's a very good question and it's a widespread problem. I think that what you have to do is basically two months Focus as early as possible on questions and issues and problems and budgets and would have you regarding the integration. So in SAP with massively change what we do I think you do diligence we focus a lot on how we can make the integration successful. So we look at the target, of course to all the target due diligence, but it's dead. Time we also do a preliminary integration planning and also trying to harden our plans to make them bulletproof. Make sure we have the budgets and resources of things. We see coming up in post-match integration. And we do one thing which is we have the same people for example in product due diligence and in the integration project regarding product aspect and that has increased the position of due diligence results a lot because the same person who has to stand the challenges in the aggression based on the analysis that you have done in the due diligence and that helped a lot to ease the pain that many companies in integration. If you start early if you have the same people doing that that helps a lot too quickly improve what you do in due diligence to do better better better. Each time you acquire another company makes sense really build us initiative early in Iraq. Does gdpr represent an issue with regard to the automation of due diligence or integration for a sensitive personal or employee data? Absolutely. Yes all the machine learning and analytics and even in a diligence looking at a list of employees of the target all activities that are massively impacted by g e r and gdpr Google machine learning is one of the key issues we have there because you want lots of data but you can use the data because it's personal identifiable information. I have to massively anonymized other things so gdpr is an issue. But you also have to see that. The API information is only thought I would say a small part of the data Lake. Let's say modern and sophisticated tools have ways to either avoid or anonymize these data that you envision. Yep. Schools you mentioned being available for small middle-market practitioners are primarily only for large firms. That's one thing that I was chasing. So at sap we were looking at different tools for screening companies and we saw that some of the tools are only offered as a service in some of the tools are either offered as a service or software. We wanted to only look at things that God can use ourselves not by hiring somebody for screening and hey $50,000 give us some company names. I think there are still some obstacles there if you look at the screening choice, but there are also some new and Innovative companies out there which offer a more affordable price tags for small and medium-sized companies as well. Another question. Is there a Best practice with Emma or ingesting a data room into a data lake so that analytics can be best performed what tools have you tried so far which have given you the biggest impact? Automation, so I think that question is very good and it poses one important thing that we need for automation. We need a reference FEMA for the information off all the data that we look at in the end-to-end m&a process. And and one thing I've done in the information my new book. I've basically built a quote unquote data model or the m&a process what you see there, of course, it's pretty complex. So that will be a part of the book as well. But to come back to your question. What I see is that there will be standardization of these data which make it easier to extract the information. I would also say that you don't have to necessarily extract the data from the database to create your data Lake. It might also be like a Federated set of information from earlier phases data room later phases that you might access to create your quote unquote. Virtual data lake, so it doesn't necessarily have to be expected. But for example, if you look at the laxity of data, if you put up a data model for the due diligence phase I thought I had around thousand data objects about 1,500 relationships and that's only due diligence and not earlier later phases. So we'll still take a long time to come up with appropriate schema, but they're also smart tools which basically help you to get help and assistance to merge different data sources. So, I want to see that currently as who bigger problem to move data from one place to another your book coming out. Can you tell me a little bit about that? I'm curious to know for somebody that wants to learn more about this topic. What can they expect to get out of it? Is it high level stuff? They kind of give them an idea or you get a little bit more into some actual things that they can actually apply. Yeah. We're wanted to basically create wage. Book that's for practitioners. Besides the I say more academic you of if a task is automatable or not. They also lot of very Hands-On thing is included there for example questions that you might raise when you run the task as you do for example, intellectual property due diligence. What are the typical question was? What are the typical pieces of information that you're looking for ETC? So it has a lot of detail information how to run a certain tasks plus it has the wrong information about if it's automatable or not. I'm also playing some further upcoming books, which will have an overview of who is for the specific tasks as well. Have you justify the cost of automating your m&a process and the proposed return on investment in other words over the key areas in the business plan to justify the cost. That's a very good question. I haven't birth. The computation yet, but I think the advantage you will get from having a lot of the information that you need to drive decisions mitigation, maybe changes to the deal more or less of the very short time in due diligence will basically provide the value that pays basically for the month increased speed in getting all the information and risks and seems to be handled and of course the value you get from the increased speed but also with the capability to process, you know, huge amounts of data finding paths talked about the Porsche customer example, so what's happening around Porsche it might be hidden in a thousand recommends. So you don't have to spend another night readings a thousand documents find something out and interviewing people Etc, but you will have the information at hand and can base wage. All the red tape that's pretty cool. It could be an interesting world going forward you have any invites you on a share in terms of others. It seems like we have some just general interests or people are curious about this and I think especially with a lot of corporate teams that run m&a and large-scale where they want to be on the Forefront of not only the people of people approaches but also using the technology to be able to scale they're m&a process. Maybe if you had some just general advice you'd like to share with those practitioners very simple to things. So one is if you're interested to make the integration successful you better focus off and preparing to make the integration successful not just signing the deal and leaving heavily and somebody else has to take care of the aftermath. It's work that you have to put into plan for decoration success. And the second thing is stay tuned to what's happening in the increasing Automation in the m&a process and the many things that we see dead. Other places eat Alexa from Amazon you will soon have also on top of the data onto just ask question. What information is in the data room how things are connected at said the automation will be there just grasp it and run the process better. I agree. I like the the Lexus example, I think that's starting to become a reality. I'm not sure if you saw the Google spreadsheets demo where they have a similar example where you can essentially ask a spreadsheet of data question it all synthesized and give you a response back. Do you foresee the valuation of firms diminishing down due diligence to ongoing Kovac crisis. If yes, you see and recommend this to be the right time the eat the deals if you exclude companies in financial trouble. The first question is who wants to sell their company in the cold with crisis if they are financially viable, so it's not a market out there. We can say Oh No Doubt With this strategy is can easily buy cheap companies if they don't want to sell to you because they want to buy evaluation and you have a tough time to cherry-pick very good companies were very low price again, unless they are in financial trouble and you come in as a savior. It really depends on the specific market for Target companies that you're looking at even if the the valuations quote unquote in theory will go down cause all the projections Etc might be not very good with three crisis numbers off. It's really I think still a tough Market Because by the founder you don't want to sell if the market is down maybe see more companies using automation during the covid-19 shut down or has it slowed down prices no matter if it's Financial or health or others is always creating pressure for companies to increase productivity to lower coughing. And it usually leads to an increase in in Automation. And that's also what we see today from an sap point of view as a p has always been sailing through Christ is you know, very healthy manner because crisis creates need for more automation. There's no question about it. I would agree with I think that's what I've heard quite a few times. I wonder what your thoughts are in a meeting your m&a process and how you may be able to do trending across multiple Acquisitions. So they are tools out there. If you look at for example companies like mid-month or others that basically provide you with portfolio management and overview of potential careers and different cases and also an Athletics across different fields that will be done that are in due diligence and our integration to have like an end to end Process Management tool. They will be a lot of opportunity wage. Is to compare different companies different integration projects different swim Lanes in the pre deal faces for the selecting different companies. I think that is all the way out there. I haven't looked at very detailed what exactly is there, but I've seen some glimpses of Frosty across process analytics that it used to know, are improve things that you're doing in different views last question doctor Carl. What is the craziest thing you've seen in m&a? Yeah. I think one of the craziest thing is what I call a cascading Integrations to basically acquire a company who has acquired another five to ten companies and you want to integrate the company, but what happened in the past the other thing companies were in integrating so you may have to integrate eleven companies instead of one so that certainly the huge challenge to integrate a lot more companies entities operations than wage. 4C before you jump into two Villages that tends to lead a pretty big mess. The girl. I really appreciate your time today in this conversation may be coming out you want to sort of add a little color or where people can learn more about it. Very simple go to my website of the call Pop. And there will be information about this great job. Thank you very much. Thank you for taking the time to explore the world of m&a with our podcast off. Please subscribe for more content and conversations with industry leaders. If you like our podcast, please support us by leaving a 5-star review and sharing it. I enjoy hearing feedback and connecting with our listeners home. You can reach me by my email. It's kissan k i s o n at deal room science is sponsored by a project management solution for mergers and Acquisitions additional educational content is available on dealer rooms blog at deal room. Net me. Thank you again for listening to m&a science. See you next time. Views and opinions expressed on m&a science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual this podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.
Structuring Talent Focused Acquisitions
"Hello, and my friends this podcast is brought to you by coming back. Would you like to avoid wasting hundreds of hours managing XL traffic and building power plant reports. You want to make a more efficient? Well, I have brings you news emanating management. For the same time. It is an improved cooperation. See real value faster long. Net here's the deal. That was my lovely daughter Sheila. If you want to keep up with the latest on m&a science our live streams networking events, when we release new resources, visit em a science, and subscribe to our newsletter. You can also follow our LinkedIn page to catch highlights of our interviews. And if you like our content, please tell a friend so we can keep growing our community of forward-thinking m&a practitioner. Now on to the interview, I'm key Sam Patel and you're listening to m&a science where we talked with deal professionals and learned valuable lessons from long experience this podcast focuses on stories strategies and what actually happened during m&a deals. We take lessons from real practitioners and enable them through our deal room platform and this podcast series. We interview leading m&a practitioners to share lessons from their experience learning proven techniques is off the optimizing your m&a practice. If you're interested in learning more connect with us at our networking events and access our educational resources. Ma science.com. I'm your host kissan Patel CEO and founder of deal room spent ten years in m&a visor and after seeing a slew of industry-wide challenges and 2012. I decided to pursue the dream and build the greatest software package Germany joining me. Today is Kristina Guerrero head of corporate development at jll. She's a corporate and Business Development leader with proven success helping companies transform and grow through Acquisitions divestitures Investments joint ventures and Partnerships with thank you Christina for joining us today. I'm thrilled to be having this conversation with you one of the values and doing an acquisition is really an opportunity to enhance or level up and organizations Talent month. I should organization's structure Talent focused Acquisitions, but first Christina, can you describe your role in your organization? Thanks for having me here. I'm currently at ahead of time bail manage a well and I receive all of the mergers and acquisition execution in the Americas region for those who are not familiar with j o l g a l l stands for Jones Lang LaSalle. We are a global commercial real estate services and advisory firm and we principally provide brokerage and sales advisory project management consulting and and Outsource Facilities Management bios. We are not generally a developer or owner of real estate. We advise clients on there real estate matters. And so when we talk about Acquisitions in the context of jail on what I do, I'm specifically referring to the opposition of other Real Estate Services firms. What is a talent focused acquisition? So a telephone was that position is largely a services-based acquisition and off the Hallmarks of a talent-based acquisition our situation. We are requiring people requiring people for their skills their domain expertise particularly in the areas of Consulting and advisory and their client relationships particularly in the areas of brokerage as you can imagine jll being principally a Services based organization. Most of the Acquisitions. We do are talent-based but like other firms me to our on our digital Journey here and interested in you know, looking at some technology-based place as well. But for today, we'll be talking about talent-based Dominic. What are the key criteria in assessing? An investment and a talent focused acquisition and if you can describe how you would do the diligence, when we looking at Allen focused acquisition, we're looking at initially a lot of the same things would for any other acquisition in understanding the business model the historical and projected financials Revenue profit and so forth. So all of that is table Stakes, but I think what makes the talent-based acquisition more unique is we're really digging in understanding the employees and the culture one of the things that we are particularly attracted to our situations where the employees of the firm are also the owners of the firm and there is really strong alignment there which enables us to do some things with purchase price and earn-outs to create incentives going forward. We also want to look at how calm the employees are not just to a sale but to continuing on as employees to jail well as closing and that's pretty critical and so we would not be interested in a situation where a group of folks are looking to age. Cash on retired that would be pretty hard for us to get value out of that going forward. It's very important that we have that commitment so that we can realize the return-on-investment overall. Make sure there's an ongoing career path to leadership involved absolutely and no leadership is as well as all the employees and and that there is also a good training and development model in place as well because not everybody is going to be there forever. Not everybody's going to last forever and we need to make sure that there is appropriate processes in place for knowledge sharing and and training how do you approach planning the structure and valuation of a deal recognizing that the values in the employees and the biggest risk is that you do the acquisition and then as soon as you close everybody leaves in your left with nothing, so that's the risk that we're always trying to minimize and how we structure the deal from evaluation perspective. We still employed a very revenue and cash-flow based evaluation methodology, but how we structure that valuation is going to be different for talent-based deal. We tend to pay purchase price over time rather than all at once and use an ounce quite extensively now everybody's got their horror stories about her. Now. It's I'm proud to say by and large they most often worked for us. They've mostly been when when we of course have some scars as well, but they have been a very effective tool in talent-based Acquisitions to new creating that incentive for the owners slash employees to walk to really Drive growth going forward. And then of course, you also use retention mechanisms as well both time days and performance-based retention compensation models. Hips are keys on how do you make an orange successful try to imagine every possible scenario and plan for it in the purchase agreement and then you'll still miss something really gotta get that crystal ball out there. I think for us the key has been in our the way we structure our house has evolved quite a bit over time and and I think the biggest area of involvement has been making sure that we are holding the acquired business page. Accountable for things they're in their control. So that's really important to folks coming on board. They don't want to be measure of things that are well outside their control like corporate allocations and expenses that they have no visibility into you have to find a way to integrate but also ring-fence the business at the same time that can be a tricky balance and to making sure that the earn-out is aligned with what you actually want those employees focused on day-to-day. Well, I am not round the variables that team can actually control exactly go tip are there ways in which building a talent Focus structure could be leveraged and other Industries. Absolutely. So I think Tom m&a is really applicable to any Professional Services or business services firm consulting firms advisory firms interior design architecture and you name it. So anything that falls in that category is going to largely be focused on talent and they're going to likely employ similar structures and models to the things that yeah. Well does I think in the world of technology dead There's Channel based on Monday and it's more frequently referred to as Apple hires frequently C software companies and Technology firms acquiring talents, but I think the distinction there is in Business Services, you're requiring that challenge for exactly what they're doing today in the technology world, you might acquire that talent and redeploy them to other projects or morphed IP into something a little bit different. It's really using a way to get access to it too. Great development skills typically, but what those people might be doing post closing is more often than not looking looks a little bit different than what they were doing pretty closing. And what does that mean in terms of repurposing the home team that you're requiring or a different projects in the technology world with an echo higher soften an acquisition of a team and maybe plus some intellectual property intellectual property maybe is interesting, but they were not able to monetize it or really turn it into a business. And so the acquirer often will either sometimes scrap that intellectual property completely or take that intellectual property and build it into a wage. Thing else that they are building internally is a way to accelerate development. And so the team the acquired team may or may not continue to work on that IP more likely they're going to work on something bigger so and Google and apple and other of these types of Acquisitions. They usually got big projects already underway that they need talent for and they'll use that wires to go get that if you're not going to utilize the IP are you actually putting weight on that in your generation? I would think in those situations not so much know you're going to be really looking more hiring costs as your opportunity cost and then the deal structure itself is going to be more heavily weighted towards retention wage, maybe or now if there's if there's a way to measure Revenue going forward and some screwed way, but these deals are often very focused on in a position of just of the talent and then retention around that going forward them to keep that strategic ones on and discard the nice to haves and what ways does the talent focused organization have to change their processes and adapt. I think the most important thing is to keep it open a game. I'm willing to learn from the organizations that we acquire. There's obviously a reason why we're attracted to the firms that we acquire. They're doing something very well. It's important that we learn from them culturally and operationally so we have to be open to adapting our methods our business model in a way that incorporates the best practices of both firms and constantly evolving in that way. Some examples might be an acquired for maybe brings a new way of managing the sales cycle where the CRM process maybe they contract with clients in a new way or have you know, some unique elements down their customer support model or are they deliver on Revenue could be a myriad of things if they're doing something very well. And that's a little bit differently than how we do it and say well we actually have an open mind and think about how do we preserve that and then maybe even reverse integrate a little bit into jol some of those practices if we don't do that and become at it with a mindset of this is how it's always been done at jail. Well, Don't ask any questions. We're not going to be very successful in motivating and retaining those people that's a really interesting View and I think talking to companies have been on the other side of the deal. It doesn't always pan out that way it really they had the better process and things get integrated in a different direction and for myself, we talked a lot about agile anything that's a very good Mantra to have that level of agility to change your plan by identify these unique opportunities during the integration phase. I'm curious. How do you drive that? You have the right View and vision around it, but when it comes to this stuff actually getting executed, how do I use align your other team members to think that way and you've got an arrow in on what we can change and we can't change we can't change our CRM system. You can't change the fact that we're all on workday or whatever the case may be, but we can certainly adapt how we interact with clients on a day-to-day basis. It's really keeping open lines of communication with the acquire team and hearing from them what's working and what's not working and giving them the autonomy home. To continue doing some things where they've always been doing them. And it's working. I like to have you give them the opportunity listen to them which is important. But I like how you define things that what you can and can't do I think that sort of reciprocates a long way of communicating and maybe that's an area that gets lost with companies that have that issue so hard that sounds for sure. Yeah. I was going to say he made it sound great love to put in play but at the end of it you always about those things falling when it comes to post day ones activity. How do you think about synergies in the context of a talent-based deal? Yeah. So synergies talent-based deal a little bit unique. So in any way acquisition, there's always revenue synergies and cost synergies and I think on the cross sides a little bit more traditional you look for back office efficiencies. We might consolidate an office footprint or something like that. So there's usually some low-hanging fruit around cost synergies and then maybe other areas that we can get cost out with the revenue side of things can be a little bit trickier in a software transaction require a product and you can log Sell it through your existing distribution channels and just seeing immediate uplift theoretically and in sales and do that in a Services acquisition. The only way to really scale Services is to add more people or make them more productive. So we try to do both and look for opportunities to engage our people in cross-selling helping them get educated on other J Lo products and services and sell those into their client relationships with vice versa. We certainly want to try to bring the acquire team a new business as well. We try to get them focused on bigger transactions with more enterprise-level clients that maybe they didn't have a lot of access to previously known as a small firm and I can do a lot for increasing deal sizes and productivity overall. So it's all about leveraging each other's clients trying to expand wallet share with those clients. And then of course as the business expands and grows, we do have to add headcount overtime will support headcount growth is needed and it's harder to get all those Revenue synergies in a Services transaction and I'll be honest you don't really pay for that up front. It's a girl. Fear is a little harder to get on some of those things actually happening on like a technology deal where you run that play many times before that's typically where we use our now is item or watch t revenue and profit growth objectives and you've got to hit some of those Synergy areas to be able to achieve that and then does the accountability ultimately fall back on that required leadership team other areas in your organization where the accountability is going to lie, maybe even on the cost energy side as well. So it's a mix of both most of our choir teams. Do you maintain some level of autonomy and how they operate their p&l database and they do have accountability but they are also part of a larger business line or organization and those leaders have accountability as well particularly on the cost side cost takeout is typically a warm functional activity. So it's shared accountability overall with the acquired team plays a very big role in helping achieve synergies. Overall. How do you keep these years? Synergy assumptions the driver's that deal realistic and obtainable you hear about this a lot of times you sort of push things to hit the valuation make the deal happen, but then things get to the next team to actually execute on these synergies and they're looking at these model as there's no way this is going to happen. I'm curious. How do you get that alignment? So that everybody's on the same page and they're really committed to doing it and making sure that it's realistic for everybody. Yeah, we're pretty conservative around those estimations. We have done over 30 transactions over the last six years. We've got a good body of knowledge now at this point as to what we were actually able to achieve on those transactions versus what we thought we were going to achieve and there aren't a lot where we fell way short but got a pretty good batting average on hitting our business cases and I mentioned earlier when you got a lot of iron out to the hitting those Synergy cases, we're not paying for it until it happens where there's some certainty that's the right way to structure it by large. We've been pretty conservative on, you know Synergy and in some cases home. It's crazy, but we can do that in a Services acquisition. We have played around some technology Acquisitions. And those are a lot tougher because they're more competitive and sellers are going to expect you to pay for those synergies up from I like the birth canal where you can Benchmark your previous deals to be able to be confident as you come up with those models one of the byproducts of having so many renounces you're measuring things forever. So we've got a lot of measurement that is true. That's a really good point. Are there any areas you would see that potentially would be the areas that are the toughest or tend to fall short when you are driving those Synergy values. It's tough to measure across selling. We have some internal incentives in place to drive that behavior people can actually share in each other's revenue streams when they cross each other but it just doesn't always happen or get recorded sometimes the synergies there, but it's hard to measure and put a number around it. If not, everybody's doing exactly what they need to do to get that credit so I can be a tough area. I remember chatting with a friend who's the integration leader and he made a point. I always see cross-selling as as on the synergies list, but then when it comes to integration, we'd never have cross-selling training on our integration list. Yeah the other area we don't use this a lot ourselves cuz I'm always skeptical of it. It's when more deals we're going to we're going to When we're going to win more we're going to win bigger relative to some baseline that's really hard to measure because now you're measuring what happened against an alternative reality that never happened. So that's a really tough one. And we tend to try to stay away from booking those kind of synergies if we win more deals and we've been bigger heels. That's great. But we're never going to be able to really prove it with any Precision wage. That's another good view of being realistic on synergies. What are the actual steps of a talent focused acquisition. I would say in general the steps are very much the same as any other acquisition in that you have your sauce and evaluation. And move through negotiations and due diligence and letter of intent and contract negotiations. All of that as you worked with signing and closing. I think what is unique about talent-based deals as where we spend more of our time. The long poles in the tent for us are really prefer some front-end the sourcing and evaluation of a potential opportunity that can be dead. Very extensive dialogue with the target to determine if it's a good Mutual fits a good cultural fit. It's more like a recruiting exercise where you're trying to recruit some executive leadership into the firm took quite a bit of willing that has to go on frankly articulate the vision you see for the combination determine if they share that Vision as well and you know, it's really about determining that facial fit in it's just going to be a good home for their employees going forward and I can take months and months in some cases that even taken years on and off you have acquisition targets out there that we've had discussions with on and off for years and maybe that will be reckoned at some point to come together. And then where we also tend to get hung up in more lengthy negotiations as negotiating the finer details of our notes and retention and employment agreements and and non-wage. It's so a non-competition agreement is part of any acquisition typically, but Anna talent-based feels very personal. It affects someone's livelihood a specific way. So it's not just about asking the seller who's dead. The Venture Capital firms or a company to not re-enter that space for some period of time you're talking about people's Jaws. Those are very detailed very personal but they're also very critical because I am providing a value for that person's Challenge and that person's commitment and we have to get that commitment in return would a non-compete help lower Flight Risk. Absolutely. These are pretty heavily negotiated. Imagine there are ways to get out of them on both sides, but it absolutely helps Flight Risk and I think the non can be combined with incentives to continue to perform post closing of the to have to go ahead and and ultimately you've also got to keep people motivated and happy money and handcuffs alone Aren't Enough always to keep you around don't do a lot more than that. This is really good. When we talk about lowering a Flight Risk straight we have earned out. So you got some long-term incentives we have other incentives are based on various financial performance metrics. You're also doing contracts. I assume your extended birth. Some form of contractual agreements with the key people that you want to retain employment agreements. Yeah. The last ingredient is really shaping a role that the individuals really excited about giving them the opportunity to lead not giving them accountability and ownership. It's often the most important element of the overall package for the sellers. I'm curious about that one. Can you walk me through it because even as a business we've been approached by strategic wage before and that's never really come up but I'm curious how do you frame that as something enticing from the onset? It doesn't seem very exciting. Yeah. We don't do a lot of pure consolidation everyday. Most of the talent that we acquire is talent and we don't exactly have today. So when we're bringing acquired teams in times that team is combining with another team, sometimes they're not sometimes they're going to represent a new project for us or new brokerage team or a new type of projects services that we're providing. We often have the ability to give them ownership over their domain and then in cases where we are combining them with another team wage. Those cases sometimes we've given them ownership over the combined total. We make a lot of Acquisitions where we're lacking leadership in a certain market and reusing acquisition to go out and get that leadership going back to something I said earlier. These are very much similar to a recruiting exercise. We're we're really looking for not just an acquisition but leadership in some part of the business. Do you ever get some resentment around title changes titles are a very important to different people and our title structure is never going to correlate to everybody else's title structure. So that's always a negotiation but we're usually able to work things out on that front a bit trickier when we're bringing a team in and there's already a team there and maybe they know each other and have their thoughts and maybe they don't and and getting getting those teams to work together and and sometimes sometimes it doesn't work out for every single person in that equation. But generally we try to bring in teams that are a good fit from the beginning. How do you plan for what competencies you'll need in 12 months. So forth were aware of that now dead. Lots of different services and capabilities that we offer we're we're falling short and that becomes part of our strategic review process and our Executives make quarterly and then more often than that are less formal basis, I need to review where we have strengths and weaknesses and we're strategic priorities need to be so that's all part of our strategic process and the trying to plan ahead for where we want to do. I'm a going forward. It's got a map to the office, you know more about it makes sense though stems from a broader strategic resource planning and then got a moves to you for execution. If Acquisitions part of that. Absolutely. I want to go back to the part where you mentioned on these Talent Focus deals that you're essentially driving it with more of a recruitment type of process I think is interesting and a big topic that comes up Christina is culture. I'm really curious on a review on what are those key characteristics that define that culture fit and yeah, that's the million-dollar question right cultural cultural diligence. We've done enough of these two no dead. . Bye now that culture is about so much more than wind mission statements and corporate values and even personalities. It's really extends into the organization in terms of how each company does business day-to-day. How do we contract with our clients? What's our how do we maintain relationships with our clients? How do we resolve an issue with a client or how do we resolve any issue internally, maybe an HR issue? So who's making decisions? We have a consensus-based culture or morally command-and-control culture. Those are the kind of things that we really want to try to understand as well that cultural diligence is how the company really functions day-to-day and that's going to require talking to more than just the CEO obviously because the CEO and the c-suite are going to have one Buick things and two layers down. It's going to be a different story eventually. So do you try to go away or two down? We may ask me ask the target for me to disclose some other folks and we see this coming up and diligence to as we're doing North Elegance around financials and HR and marketing and all these other areas and talking to all these different people who represent the firm in those functions. We can see how they operate by how they run their financial process how they run their reporting and forecasting how they conduct their marketing how they conduct their HR processes. So these things come out in pieces through all the functional diligence as well. And those are really good conversations to have it taken to just on many players for us. It's really cultural due diligence is almost a layer that hangs over every element of diligence because it's going to shine through Thursday our interaction. We have you give me an idea some of the titles that you would want to speak to we want to talk to not just the CFO but a director or VP in finance the guy or girl who's doing most of the work bullet and working with the system's day-to-day so somebody in the trenches, we're not going to go away far down because those people just don't get disclosed in a position scenario. That's just reality but down to the DPR direct your log. Some of the functional areas functional leaders basically functional leaders or the functional leaders number to those can be helpful. Some of these companies that were required are very small. They may not even have that many layers and we can put underneath by talking to five or ten people. But yeah, it's special years. And then also if we're looking at a firm that has more of a infrastructure around sales or customer support we want to talk to some folks there as well to really understand how the approach a support situation. For example. Yeah. I like this. You're not looking at cultural rituals. You're looking at the way they deal with issues and make decisions. Absolutely. We've also took in a few cases and you need a firm a little bit of a certain size to ask this question, but how you conduct your angle review process? How do you determine compensation? How do you determine bonuses every year and she might even ask for some of the very key tones that we're going to pull retention out to my ask for their performance reviews the last couple of years. So we really want to understand how they are assessing their own Talent as well. That's a good tip wage. The performance reviews. I have a recruiting question for you. Tell me about a time when you walked away from a deal because of a bad cultural fit why so it usually for us happens pretty early. We walked away from the deal was due diligence for that reason. So it's happened earlier in the process. I would say they've been a number of situations where we have a very collaborative culture in jail. Well, it's a nice balance of professionalism and entrepreneurialism, and we've met with some other firms or consideration for a position where it was not as collaborative of a culture as a little bit more cut-through. Maybe we read some real life concerning things on glass door or something to that effect that you know made us cause that's a that's a good resource as well can be some of it with a grain of salt but sometimes our interactions with the CEO or the owner took firm. It's just not a good interaction. We certainly have those situations, but in most cases we walked away from those before we've gone too deep into the process interesting. What are some challenges that you may face on dead. And Acquisitions the biggest challenges. We Face are around these doubts these tend to be longer announce than you would see perhaps in a different type of transaction. If we're putting out a certain age. Are you for firm? We're going to want to try to get a payback on our investment or at least some return on our investment within 5 year or so. We try to map the non-compete to that similar kind of time frame used to be longer. Now, sometimes they're five six and I've even worked on seven year or now switch. I think some people here in that on this on this podcast probably think that's crazy. We've done them and sometimes we've had to go that long to bridge the gap on valuation expectations frankly, but that can be really challenging to negotiate the details of that. You've got to anticipate how the business is going to look five to seven years now anticipate any potential reorganization or build build some flexibility into the agreement around unanticipated things like that can be even harder to measure these are adults going forward especially wage. And people are constantly turning throughout the organization and the person measuring the internet might be two or three different people over the course of a five seven year. They gotta understand how it works and how the agreement was written and there's inevitably Palm all around how revenue or even does being measured we frequently get into you know scuffles over that we don't really get into a lot of flat out or not disputes in the classic sense because at the end of the day, it's an employer-employee relationship in most cases and neither of us wants to engender any ill-will. So really try to work towards a mutual agreement find a win, but we certainly have lots of discussions around or no measurement and then the other big area mentioned isn't even that competes those can be challenging as well negotiating the finer details of lots and lots of learnings on on her analysis and and measuring things and it can be really hard to integrate a business and ring-fence it and let them run their own p&l for a five to seven-year period that can sometimes hinder the cross-selling you might not be able to get all the benefits of integration when you haven't are now in place and that's the balance. To work on for those are big handcuffs. You have to special-order the it works out people seven five seven years in they still stay on her now schedule. Yeah. Absolutely question I have here is if you tend to do share or asset deals 1,000 if you do either one share or asset, which one do you typically lean on and I'm curious to know if earn-outs would actually impact that as well typically mean towards asset deals done share purchases as well. You can use it or not structure in either. So there's no limitations around or announce driven by acid versus share and we've done some that are escort positions with 338 elections and all of that too often. I think the key thing to remember with her notes, is that or not have to get paid out in the same way the all the other purchase prices paid out. It's got a match the cap table. You cannot allow a situation where I bought the yarn out money becomes a pool of money that the owners can just do what they want with and they really did a great job last year. We're going to give him some run out. Well Billy's not a shareholder, so he's not entitled to that money. In case studies on this real life situations where that happened in or not money became fungible and that's a big know we look for reps and warranties in our purchase agreements to assure that off or no consideration is going to be treated just like all the other purchase consideration and that it's going to get distributed in accordance with the capitalization table if it cut and dry. Yeah as an area we can get off too quickly. But until experience around that managed to keep it clean we do around to learn out some definitely going to send him and that's going to be a big round table of solving people. I've had a good number of guests that swarm off and don't notice any more. So do you have a playbook for synergies a standard set you look for in a play book and then it's not written down anywhere but there are definitely synergies that we look at over and over again deal with deal and synergies that we try to avoid like the we're going to win more together Synergy and then. And then we do a deal that doesn't look like the other deals that we've done and get any think are there some weeks energies here that we have never seen before but no formal play book, which is more knowledge-based. I would say who's got the biggest influence often comes to synergies because you can have some coming from the target company. You can have some coming from your different view within your own organization. Obviously your corporate team. Where is the info firstenergy's come from I would say in most cases. Jll has the most influence in bringing synergies to the table because most of the time we are acquiring a firm that's much smaller than jll most of the Acquisitions. We do our very small or mid-market companies Boutique firms in some cases. We are definitely bringing a lot to the table with our platform in our client base, but small firms percentage too. So I don't want to Discount that but just giving you a little sheer size and breath them sort of global reach. It's inevitable. We're going to we're going to bring a lot of that to their I guess. I was curious about determining it and building out the model control. To the assumptions. Yeah, everything we do has a sponsor internally. So it's typically that sponsor and his or her team are helping us estimate with the synergies are going to be in we're going to come from so it's very much of an organization that's going to be absorbing the acquisition. Oh, have you seen the current environment impact these kind of deals? Yeah. So it's a good question. It's impacting current deals that are still integrating am moving through there or now. And it's impacting obviously new deals in terms of the current deals. It's been challenging because obviously a lot of areas of the market have seen a big slowdown. We certainly seen a Slowdown in certain parts of our business and some of those areas are areas where we've done some Acquisitions and past it's challenging for those firms that are they're firing on all cylinders trying to hit their earn-out targets. It's just got a whole lot harder with Kobe hitting and they may be derailed all together and hitting those targets and feel unfair that this is happening right now. So it's definitely impacting those current deals. But at the same time there's always the risk off. Slow down that's always out there when anyone possessing that position I would say with regard to new m&a. We've definitely been very cautious about undertaking new m&a this environment. There's just been a very broad lack of visibility in terms of where the industry were. Our industry is going to be over the next six to twelve months. We're always on the lookout for attractive opportunities well-capitalized opposition to the quickly or something very compelling comes along. I would say more generally in the market. There's been abroad slow down and m&a in the second third quarter, but I think it's starting to bounce back a little bit. You've got six-plus months of the pandemic under our belts now sort of know how different Industries and firms are behaving through this time. We've got a little bit more knowledge will be better visibility in some areas. And with the same time. We just can't sit around all waiting for this to be over just going to be another probably a year or two before we really start to get back to some resemblance of normal m&a can't just walk. The sidelines forever. I've been seeing a lot more coming to market now just in the last several weeks similar to what we're seeing in the IPO Market some signs of life and Revival and for companies that have demonstrated over 6 months at things have been falling apart, but they've been actually resilient and maybe he'll even benefited from some of the Tailwinds around Covent. Then those companies are going to do very well to think in a same process as going time. And of course you're going to have some distressed asset sales as well coming out of this. Let's taking time for those to evolve six to nine months. Now most of endemic we're starting to see unfortunately some distress situation. That's really sounds great. It basically went from a complete halt to proceed with caution. Yes proceed with caution exactly, right? Christina what's the craziest thing you see in an m&a crazy strong word nothing too crazy, but we've certainly had our interesting and comical negotiations at times. I remember one transaction worked on in my former life at IBM where the sellers were very insistent that we keep getting that fruit basket delivered every Monday morning to their office everybody in the office loved the song basket and it was like a cultural symbol of giving and so they committed to that in the purchase agreement that we keep the fruit basket coming for X number of years with a weekly wage Novak's and it was that was critically important to them and we've seen other situations like that where you guys we need a wine budget and send one to our clients every year for Christmas and we send good wine and this is what we said then can you make sure you you underwrite that in the business case and put it in the contract and in cases we have it's funny we get hung up on the big stuff like renounce and employment agreements, but we get hung up on the song. Stuff too. Sometimes sometimes these things are symbolic of something much bigger cultural. It's a great negotiation tip. I'm going to start blocking cost synergies in the. This has been great. So as some of you may have heard we're starting a women in m&a podcast series and in fact, Christina, you may be contributing to it. I've heard that's coming up. I'd be happy to participate sounds exciting Christina. Thank you so much for being a guest. I really appreciate the time and sharing your experience. Thank you. So appreciate the opportunity. Thank you for taking the time to explore the world of m&a with our podcast Please Subscribe for more content and conversations with industry leaders. If you like our podcast, please support us by leaving a 5-star review and sharing it. I enjoy hearing feedback and connecting with her listeners. You can reach me by my email. It's kissan k i s o n at deal room science is sponsored by deal Rome a project management solution for mergers and Acquisitions additional educational content is available on dealer rooms blog at deal room. Net off. Thank you again for listening to m&a science. See you next time. Views and opinions expressed on m&a science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual this podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.
Welcome back to level 1 of learn English with Cullen lesson 46
"Welcome back to learn English with colored by EAT Magazi- in today's unless you can choose a new level of English to test your memory we are adding and you level how you try and remember woods using using images. The new level is cold level. Four and in Liberal. For of our listen there will be no words in video. Listen to look that they will only be images or photos so let's go back attack of the labels again. Liberal one is slow speaking las- Liberal one is the first listen. The council out in every series series of lessons liberal to is faster speaking class and liberal to is the second class repeating the same words at a faster speed liberal. Three is the list way you can taste your English. I life filling in the onces in the form below this list. And all the lanes if you cannot not see the form liberals three is the fastest speaking class level. Three is the same speed as a regular knighted a leash speaker liberal four. It's also it same speed as a regular native English speaker. Speak the video in this. Listen will have no written words arrayed in the video so in listen for war you can also tastes your memory and by listening to the words spoken and see the images with no yeah no text and just the images. This will help improve your memory of the words spoken and in listen for you can fill in the form. And what's the questions just using your memory of the class with out the words Listening to lay since four law and looking at the images in the video flute also improve your listening skills and just a quick reminder you you cannot see a video while listening to any listen can always find the video. ooh On our website at each may dot com Tom that he. A. G. G. M. A. G. DOG DOT COM. He is education. Educate yourself and a is for ability to improve your ability to learn. It is not which teach yourself how to learn faster. And she is train train. People on what you know. If you shit in your Rainbow Fish by training other people you will not fast. This is just one of the secrets to eat y of learning English so please look to A.. T. T. M. A. G.. You calm the your next lists.
How to Hire Talent for Today's M&A Climate
"I'm kishan Patel and you're listening to m&a signs where we talked with deal professionals and learned valuable lessons from their experience with this podcast focuses on stories strategies and what actually happened during m&a deals. Science live putting together companies is complicated and taking a part is even more complicated on this podcast series. We interview leading ebony practitioners to learn lessons from their experience wage earning proven techniques as key to perfect your m&a practice. I'm your host Keys. Patel founder and CEO of deal room. I spend ten years and have been advised her and after seeing a whole slew of industry-wide challenges in 2012, or I decided to pursue the dream and build the greatest software to manage emanate today joining me is nitin Kumar CEO of a pandemic name is a 20-year m&a veterans worked on over a thousand emails on all sides including emanate strategy commercial operational technical diligence integration separation. Most Diesel Performance Improvement for private Equity. Also joining me. Today is Thursday Franklin resident of Franklin Consulting Services. Rhema has held several corporate development roles and Industrials looking for ten years of having experienced. Today's discussion is a talent Gap in m&a. Everyone mentions and sells on the high failure rate having a at the end of the day doing deals is all about people the right strategies key, but more important is having the right people to execute I've seen a myself is a lot of m&a teams that aren't built out to do the deals. Well today, I'm bringing in experts with experience to wait on this so to kick things off was changing. The market wage is requiring a different need and talent you want to kick that often. Yeah, absolutely. So as I always say the business has changed drastically over the last ten fifteen years. I think I found particularly has remained the same as the same rigid playback same rigid process up front. Let's go back to Union and was changed. There's a number of different trends that are impacting. How a minute. True too wet. There is a delineation between the M&M process and value creation when I see how many process it's all the usual stuff integration management even planning check out. As Pearson energies and things like that. I think that has got his own place structure rigorous discipline. The value really comes in from creating value from the functions or creating value from a foundation of Destruction and functions. So the value Creations is really created by strategy and operations while the remote turns the correct. So that's one big Trend second many people sort of fall off the Chevrolet place in the choir, right? So the definition of a ceramic wire was doing consolidation Burgers back in the first part of this Century, right and now you have consolidation murders you imagine dragons you back wires. You come out Integrations and you name it if the people will cost around this, you know, occasional serial frequent. So I think there's no serial acquirer you a Serial acquirer of a certain age are given point in time. So you're a universal blame doesn't really apply right you live emerging disciplines like technology diligence and Commercial diligence in wargaming. I mean, lots of people are dead. Digital stuff now so bringing the technology is where the value is locked. You need to understand the stability the interoperability performance scalability all of that. There's that wage happening execution under uncertainty is a big deal. Right? I mean the market environment is changing does a whole bunch of structural changes take a look at go with great. You can run a play with now because you're off these are modeled in for a deal that was in flight. And now it's kind of, Parts. What are you going to do? If you run your mercy real flavor? I don't think that's going to create value bother to more friends. One of them is that I think synergies starting to mean less now, it's really about shareholder value traditionally people thought about costs energy Revenue Synergy. Now, you're talking about sequence of reciprocal structural beta synergies and all of that rates. There's a lot of the stuff going on the biggest change in my mind and how to create values the breakdown of functional integration and dividend destruction integration. Also integration was when you sort of Rome, Companies together combined the functions groups and combination of value to cut costs created a secret skill but you can't take that approach and move it into the structural part of it off industry structure and destruction is altering the landscape altogether, but the thing is about structural synergies and revenue synergies very you need to get the whole Machinery cross-functionally firings. You can figure your I move value everything is changing. The Advent of platforms is the new thing for Punk of the values outside the firm right? Think about an Uber or Airbnb your community management is the new HR rate. Your marketing is Dave roles and all these things know how do you contain functional integration approach moving to structural to a platform life has evolved a little bit right? So that's sort of where I see many of these Trends and deviating from the best one of the changes you see in the market Reba. I would just say very simply that I think the financial engineering element in deals has been optimized so dead. Really individuals have to look harder to have to think harder and they have to really think about what is the Strategic value of what it is though that we have to do in terms of a deal structure and I think a lot of times what happens is that people, you know think of a deal is just making a widget and it's not making a widget you really have to think about how does this fit into the organization? What's the optimal structure for the organization to take advantage of the initial investment Theses that actually brought the deal forward. I also think another important thing. I want to pull out the Newtons folks who was a need for operational leadership. They really need to be in stride with your m&a team group lead. Whomever. If you don't have that kind of operational by in fact, I'm not going to see any of the results that sold the deal in the first place and if you don't have that, you're really setting yourself up for failure and I think a lot of times people think oh, you know, it's Jeff. Great deals a great multiple and it's going to be but really to me I didn't have to take a step back and think about how does it fit into the bigger picture? I really gets to one of the core competencies. I think you know, it's a nice to have quite frankly in an individual was running anime. M&a excuse me is really the ability to zoom in and then Zoom act so long. You gotta know the nuts-and-bolts of deal itself, right? And there's a hbr study that's based on this but I will apply it to M&T here is the ability to zoom. In fact the mechanics the innards of the deal, but then be able to zoom out and say well this is how it fits into the bigger story and you gotta be aligned to the bigger story and every organization has a story and if you don't know it then I thought that's an issue in onto itself because that's why you should be doing the m&a. So there you have it. That's what's changing. So, where is he a lot of different things happening with the deal's off? Which is around the deals. I think this is a good segue into what are the specific skills that are required for this current changed Market, you know absolutely can take a start for that. So as the deals of moved from a consolidation into the stuff that I just talked about right across industry has kind a countdown image degrees of freedom. If you think about the world functional expertise, if you are doing Finance ideas are real estate and supply-chain to an extent largely get across Industries and understand the Emily process and the process is very similar right A lot of these things are now being done in a front office where the product is fundamentally different. You cannot go to a company or some executive and say hey, I'm a product development expert type across Industries the chemical formula of a drag off the manufacturing process of refrigerated building software very different. So because those are different the configuration of the front of his altars very drastically, right yourselves is different in marketing is different you prod Customer experience pretty much everything becomes different and you use this model has emerged around that to the industry is produced which was really important at the top is now kind of sinking to the boss not saying something with industry expertise, but that's becoming more and more important at the moment in terms of the skillset. Also, the center specific stuff is emerging because business models are song even even inside if you take high-tech largely played in a hardware model or semiconductor model in a software model or very different so that it really need to understand the business model on how the deal is cattle-raising a go-to-market motion and a product and able to scale that to take the structural forces and create the revolutionaries is much more important than ever before I can tell you he's not but I guess I'll get a little specific on what are the kinds of skills such that I think are really important things like problem solving things like project management skills things like Financial analyses wage. Financial modelling things like, you know story development and being able to create that investment pieces that gets the stakeholder buying those are in my mind complete table Stakes. Okay. You can't even a conversation it is we don't have that. So we'll just put that aside and say yep check check check. So what are the nice to haves? Right? What does things that really differentiate individuals in terms of Performing execution on how many deal and I did a little bit about those human zoom out capabilities and really I would say the next big thing would be creativity. I think a lot of times people don't think about and this is the art right? This is the art and the science and it's just as critical and you know, people just don't understand what that looks like because a lot of times organizations that are thinking about having a corporate development team don't see themselves as Leaders may not have actually done a deal right and I'm not talking about, you know, I was on a team in an organization and I am To each our due diligence that's not doing m&a. Okay, I'm talking about origination development of proprietary deal pipeline moving that stream negotiations, etc. Etc. And a lot of people think touch deals and there's all different kind of functional very important skill sets that you need to have but I think you need to have an individual that can kind of step back and provide all those linkages and that's where the creativity comes in money and cash are very important in a deal. So I'm just going to say yeah another bucket. Let's talk about the other stuff. That's also and can be sometimes that's really really important. I like to give examples. So you'll just humor me for 2 seconds. I was working on a deal in Boston and we were just gone right so we were at the point of completion and it was I think Friday or was like a long weekend our CEO leaves comes back and said, you know, I've got an idea. I want the firetruck and like what are you talking about? I want the fire truck and I was in nineteen forty s antique farm truck when it looked cool. If I had the fire truck, you can't get the fire truck is part of the asset listing that we've just sold and we're just closing the deal. Well, I had to make the phone call and say you know what? I need the fire truck. So what do you want so that being the case I think you have to and that's very odd and it's very nice very memorable events, but I think it speaks to the fact that money is important. But I think there are also other things outside of money that creativity can lend itself. I'll leave it at that what I completely agree with me that it was saying and she was going through her words share. Something has struck me most important thing is to connect apart from that mercenary real rigid cock and build your ability and skills and around the execution under uncertainty and I'll give you two examples one. I gave you by the code raise revenue synergies all remodeled and any Sorento vs. Edge. I'm scared to predict just not going to create value. Let's go back to a practical example on house energy is different from shareholder value and a number of people who are here on this attendee list. I recognize me as long as this example because I talked about this everywhere point to think about the Microsoft not here mega-deal. It's been a few years. He died in nineteen billion for it. The strategy was extremely sound okay with having a pre-existing videos mobile. We need a handset Blackberry is declining and this thing kind of integrates into SharePoint 2 Microsoft Exchange to office together. I don't think you can question that strategy with them and placed it was a girl going in hypothesis. It was an assumption made and this is where I think the answer is in the inability to trust us the assumptions, without naming names here, seven people who came and set this Apple and Samsung is consumer devices never going to make it into the Enterprise right not going to happen is we're going to be the kings of the Enterprise Mobility off. Starting doing secure step one step two step three step forward by the time you were at some staff the velocity and ferocity bypass the Samsung and Apple went to the Enterprise and knock the socks off every single option on the deal was mind-boggling brain thirtyish, or did you create shareholder value? I don't think so. I don't think the market for give Microsoft for that for a long time right off a difference between getting surgery and you think shareholder values to integration processes aren't Play books which are as good and sort of written in the last century. So I think a really good point with the whole theme around with security under uncertainty. How do you drive towards the how do you sort of identify a potential Talent is somebody that has that capability and we all have different ways of identifying Talent. So I'll speak for myself and I think you guys got some life examples somebody there is somebody who's running instruction based right and they secured you give them step one step two step before it goes like a bullet the situation is slightly off. Nebulous, right the running around here and there so there is a simplest form of identification on who can execute you can figure out and who is comfortable with 70% data and making assumptions are going forward wage level of accuracy and really wants and rolling after that. How do you identify those people? So I guess that might be a little bit different I will say this and should I say to people who say that they can't dance everyone can dance and it's my since your belief that most people can do deals and do them quite well and the one down and see for me. The number one thing is, you know is individual a problem solver. Do they ask you questions about how things are being done in the organization. Is there an inherent curiosity phone now? Why are we doing the things that we're doing and why we're doing them. I think those are the individuals that really strive and quite frankly survive on m&a role and function and having that is dead. Think just Paramount it really really is and I've been fortunate enough to work with lots of those kinds of people. There's lots of amounts are just like there's lots of people say they can't dance but they definitely can so I'm not talking about how well we just discuss, you know, the skillset how it may vary across organization type and Industry. There's confidence in different configurations up there. There's nothing right or wrong, right you have centralized you have decentralized arms and legs inside the views you have centralized integration. You have decentralized functions your centralized everything and you have these thoughts as everything you have a guy guy and then you have integration and you know, obviously some support structures are some strategy in operations. I don't think the answer is right or wrong that I often ask myself as what what is the cohesion between them right and ninety percent of the time in all of the people on this call and we've seen that you some exactly falls in love with them. You get to be Source Corp and execute the deal just throws the transmission book in the Synergy and it's in that you made too much snow. You can't execute this energy. A lot of that happens. I think the real thing in the boss Christian approaches detector alignment between strategic and operational costs. And that's to the point that I think Greg born was making an embryo was making it operationally understanding the business and the nuts and bolts metric a really very important. There are still be eyes which were important run the business and there are individual metrics that drive Behavior right may not even being behaved. So it's really designed alignment is off. Now the acquiring business unit the every integration people and Link rewards for all in this together and and even the acquired Executives. They were all in this together and there is a certain goal that we kind of hit show me and you know, just go back into the appointment. Remember the details of financial engineering are over. You cannot track these things by emails anymore, you know Financial engineering and hide behind this right go look at run-rate it's dead. Execution oriented metric you can hike with it's very plain simple. It's out there in your face numbers come out and then life is all right there. So these things are more important than you are structured and configure and there are deeply rooted cultural issues baggages exactly personalities and Reasons by things are structured in a certain way. I think you can still make the machine a condition where we had structured is just to make sure that there's a vision there's an execution record the metric survived everybody's marching to the same goal. So this is for my own personal experience, but I would say that in my mind is probably like three different categories of how usually m&a incorporate of teams are structured one is in a portfolio company fashion. So imagine like a Dover Corporation may have a lot of you know operations that are in varied Industries et cetera, and they have a corporate role as a very centralized function then you have, you know private home. Empties that will at times you know before they used to have the m&a individual reside within the entity as a GP, but now interaction going down into the llc's off and into the operating entities and executing on deals for the acquired in portfolio companies, which I find very fascinating is this Rose the other category, I would say our strategics and down on the Strategic are just the most fascinating right because many times particularly if an organization goes public there's a mandate for Brooks in if there's a new CEO I was off excuse that growth and what you've done have is basically a new functionality that's created and you have to go out and kind of Define Your Role structuring build the team, you know build the story and then took fault. So those would be like from my humble view my link person's Viewpoint from the outside. I would say there was three varying characteristics and the types of organizations that I see on t e And you know, then you've got like large publicly held organizations that are strategic that have a centralized function. But what ends up happening in the centralized function is think it's so far away from the actual knowledge of the market of where the money is being made. There's no linkage there and so they have no idea what would be ideal to acquire in a Marketplace or not. I'm not able to acquire and how many organizations really do keep their 357 year strategy plans up-to-date rarely do they do that? And so I think having you know teams whether it's challenging corporate development m&a how are you terminate is I think a very critical function in an organization. I agree. There's lots of ways of doing it very well. So I'm here in the theme from both of you about having a strategic information operation alignment and and doing this podcast for about four years. Now, I consistently heard this theme of getting integration involved earlier importance of that. You're more money. Is that Natural Evolution that's happening? Absolutely. I know Craig born in the conversation with around developing that true partnership between corporate development integration or even become a single function where integration is together in one group of corporate development. When we look at that integration leader, I'm interested spend a little bit of time sort of identifying that person and their skills because I thought that's a real specific role that's really shifted and evolved and I think there is a clear definition on how their skills of really evolved. Maybe we can just focus on that specific role what their accountability would be. Absolutely and I think that role has evolved in I would actually see many people don't understand the evolution of that rate. So my filter question whenever I used to integrate companies and I said either the integration leader is involved or not because I need to adjust my style right is really that how are your Imo's configure in your prior bills eighty percent of them will draw six box. Thunder and I am oh and say this is this function. This is this function without actually understanding, you know, that's a different type of a deal your Prime money instead of a different kind of a posture right? You can have a functionally configured. I may have value driver configured. I am home because if you got a big Revenue Center, so you got to go across functional. Are you driving deliver Foster? Are you in an argument and Report Foster? Are you sort of an elite influence position in this is the beginning is change management in the IMO is not so it's a very it's a very interesting finding that eighty percent of the people are still thinking of themselves as the program manager right and wrong the other ninety percent of the remaining 20% will say I don't know. I mean, you're not going to be when that guy and that guy the position right? I only execute so I think in today's world cup of mindset is not going to be successful. What you need is a person to understand there's a governance which is the air traffic control. Okay, the integration leader is the pilot flying the plane and if it doesn't fly the plane value got to end up in a cross-functional leaders are the women who are figuring it out and your company acquired company and all our to run be verified your degrees of freedom need to be a certain their aircraft carrier. They can know what it's like, you know for airplanes law if you're not being an ability to fly the plane and you don't have a run we built out Enterprise deals and you don't know whether I should pull the joystick but not rely on this women or or not. You have a problem, right? And then again I come back. I don't want to belabor the point your ability to sort of anticipate problem plan in advance really think about how do I pray? What's my plan be if uncertainty comes versus uncertainty becomes right is not about the Playbook. The integration Leader's role is absolutely critical. I mean, he is managing like a thousand stakeholders. Yep. You can point that means all and start with the organization you're dealing with many moving parts. And again, you just cannot go step on to stand in a very programmatic fashion. You go to improvise off line to stakeholders move and the posture of the integration and you need to have the ability to stand up and receive license in right and that's a very important skill as well. You make the decisions decisions are blocked you enable the decisions with the data and facts, right? One other thing that I need to bring with an example is that and that individual is out here. So I need to be careful wage a big deal, but we're doing the data center migration right from point A to point B, the boxes are moved and it comes on the application status is green and it doesn't work the you hadn't asked the individual all the task is complete. I will need from point A to point B. I'm like, but the thing doesn't work, right? Yep. Actually bad dream is the best. Jeanist. We follow so like this needs to be and this comes back to me and that that's supposed deal. Right? I mean, what is the migration method of picking the right migration method is not being flown. The right approach is a lift and shift the right across do I have ability to my ability to test do I got to roll back is my PCP in place if my PCP is in place has it been tested not twenty-five years ago, but since then right so you need to get into that level of detail that I mean I am your leader is your name so expert and I don't expect every animal leader to be a sport with every function but ask the right questions now that is is green on the time Dimension and I would just add to that. I think what you're really speaking to Thursday is humility to manage risks, right and to be able to create those risk mitigating actions and behaviors that we can get you to the end result that you're expected to get home. Because we just don't know what kind of liability or what kind of a hit to Value might happen as you're going through the integration and really the deal guys just going to say you know, what a perfect deal right cuz it's always a perfect deal. So, right exactly and I think that's where you know, you really have to be able to understand risks and find the right medical doctors know let's listen to your balls. I I recently had an interview with Java and musalia Travelex a few days ago and I like the way he summed it up. It's less about having a project managers to manage to lead integration form or by adding a GM to be able to do that which makes a lot of sense because then we're talking all these different functional skills in terms of having that view in the big picture back and I didn't even a sense of Italian when we talked earlier to be able to zoom in zoom out. Which brings me to how do you find that person? Where are you going to source that talent because and against pretty unique dead. unicorn no Talent exit right Talent exists. And sometimes we haven't just shoot the individual that you're more capable than just or be that you slide in these are generally high performance in a company where I'm a good General management background are till 7. Okay. They have either been a recipient of a deal of sponsor of a dealer some point in time big or small understand the business model will understand the complexities and actually have the ability to navigate the organization and rally troops and you know, obviously execution is a very important skill strategy and creamers and the whole package has been in this wrong this role exists in every company. Some companies are much more aware of that individual has other companies need to be made aware sometimes individual needs to be made as long as you going to be pretty good and successful at this right. I think everything you said. Yes, I would just add to that again to have an individual that's always asking me questions of why because I think a lot of times when you're doing deals, Whereas things you're always doing these kind of challenging the status quo and the results that you're currently getting and asking why aren't we doing more and so finding individuals that are just thinking about things again? I think in any tasks in any function that you do you can have the ability to do your day-to-day tasks, but then you also have to bring that back and say okay in this organization, how am I adding value? How am I creating Revenue off my creating even draw right? How am I added to this equation? And I think individuals who answer that question for themselves are the ones that you need to have animals like this because those are the ones who can hold them accountable the ones who want to Delight you right? They crave approval right? These are the folks that crave approval. So these are the types of characteristics just personality types of your emotions are are just individuals that are constantly looking to get approval to win and be creative if we break this down between internal and external wage. It's interesting you both have had internal and external rolls. Their seemingly is value of utilizing in-house books, right because you were there and you can sometimes just grab them make them. Yeah, and they're cheap relatively right? And then there's a lot of value where they're familiar with the business. They're going to have more accessibility to the information that they need exactly know where they where it is off to walk over to, you know, Jon's desk and take a few minutes versus somebody external and they spend a month going through approvals to finally get what they want. So I'm curious in terms of years in terms of when we look at sourcing this is we are looking at internal folks. I mean we're pulling people in that have never done m&a deals and how are you going to get them up to speed and sort of along with identifying a skill set that you want and then point of getting external people when that actually makes sense and you are going to get some good Roi plastic want to do is buy your firm index email. We got a $200,000 off. Weekly invoice coming out of it for you know, and then it's actually anybody's ever worked with him off. Let's bring that industry. There's immense value in having an individual familiar with the organization right to your point. They know where the information sources are out to navigate the organizational what works what doesn't work and all that right you Source an individual within the organization where you already have a critical mass of season demanding talent and you can sit in one or two people who are did you earning minimum wage or two who are the apprentices in the craft kind of revolves the fundamental reason why you go outside the organization is for two reasons and organization. Absolutely organization comes in two flavors right off, of course Executives who will bring in something from the other side of the organization and second is to go into the Consulting work. Okay. So the way to think about this, is that firstly do you know your dog Do you know the frequency of your deals? Do you know the type of your deals? And by the way, you know the outcome of your day or spend each of them which ones have been successful which ones have not been successful that intervention you really want again. If you want to soar somebody internally, you're gonna sort of that place them for the internal stuff. Somebody coming from the outside is challenged by bringing in change and the console and off of the company really coming out and if the ability to fight the antibodies is minimal by bringing in an employee. That's when you bring in the Consultants because they call it off. There's no vested interest in there. A lot of friends. You need to go to a paper draw what deals of it. I'm more frequency and all that stuff and save it at this is internal or external. Now a lot of people are okay with doing Aqua hires and you know off and there's and there's less operational complexity. There's more even chemical sensitivity consolidation managers have been paid into the new business model is very very very struggles. And that's where you go Consulting witches if you want to change the Playbook and Thurs Somebody into learning the art and craft of that that you sort of bring in a new person from the outside. Typically the mistake people do is that you take the purchase and start to evolve a job description around them aggressively for a complete failure and disaster right build a job description out. I would even put somebody who seventy eighty percent means the criteria don't need to go a hundred percent but wage job description around an individual and improving skills or change anything. It's just going to destroy value and how many times have you seen this like every day? Yeah. Well, I was just curious if we're going to tie in the theme Jilla D into this as well. Yes, we're going back to the old playbooks syndrome. That's exactly what I was thinking about was agility. And the fact that the role has evolved and we spoke to that I think quite a ways away but my thinking now is that if U comes to actual execution of the deal itself, I think the optimal scenario is to have someone on the outside. I was recent call log Working with an organization where we would go into 12 people meetings and the result after an hour and half would be we would have another 12-person meeting to decide is the first 12 person meeting was sufficient to make the decision. So no decision but a consensus over and over again and so, you know from that experience I kind of said well with people if you have an outside entity coming in and saying this is the deal structure, this is how it needs to be executed. I think it might so it really depends on the organizational culture right. So if your portfolio organization, then you have a lot of operating entities in your acquiring all the time, then perhaps having an internal function do that for you make sense. But if you're a strategic and you're thinking about trying to get a deal done and you haven't done one in the last decade, it's probably best to get somebody from the outside to help you out cuz it really helps in building stakeholder involvement wage. Value and I'm sort of really understanding what's happening. Right? They really can't hide from it at that point that makes a lotta sense. I guess when we talk about just challenges of hiring. What are those specific things? What do you see, I guess in today's market in terms of finding the right Talent obviously have a lot of people a big pool out there. But there's a lot of people out there. I think the challenges are in sort of four categories red one is a lot of people stuck in the old world integration and you know, just because your company has done a lot of quantity of deals doesn't make you good in the New World Order right and ask em love em, and I had this discussion that how do you differentiate between New World Order and Old World Order? I mean, it's a very simple question show me how your IMO is configured. You will have five hundreds of boxes and going to the IMO. I mean, you don't have to ask the same question from there. What if they can put that into the deal context? I think there is that part of it saying is the ability to adapt very important skill and a lot of people are again program managers trying to learn off. Yeah, well coming in today's world is very hard to keep up number three and this is particularly challenging in the sectors that I work in tend to hire you or somebody to know working from the network box. And that's just a cultural risk in Valley Inn in the media and Telecom right? It's all referral and it's all that that's great. You want to help people in the network and all that. But if you want fresh thinking you need to also think outside the box spring from us at the box and then I think a lot of people are not taking that leap of faith, right because I want to and drug tested people but it's okay if there is somebody who's smart, I mean you're willing to take a chance and there is hunger and appetite to learn like everybody learn everything else people can learn any sort of give that chance and be a little bit more open to that and I think that Mind Block location was a big factor because there's acquisition certain companies that are extremely secretive right or building stuff and mine asteroids Infiniti years from now and they're extremely secretive. They don't want to let people watch that for Thursday. Because you're so constrained in the location part. You lose Around Talent who maybe actually really good but are in location XYZ and are not able to adapt to that need. Hopefully that changes a little bit off the coolant that those are four or five things that have been fairly challenging in the one last part we talked about is the ability to identify the right people of Zelda rounded person who understands at least the bare minimum wage is at least a v about Finance operations technology strategy and then you gradually stepped in one area, you know bringing people that part is not well thought through on how we hire an integration a person you just throw a job description to a external Source warmenhoven sticks, right? Those are the things that make it even more challenging a lot of this has been solved created by the organization by sort of posing your office location or an individual or or things like that. Yeah. I was looking at the questions that Bruce participants had put in the chat and I think Greg had put in two cents about lack of ownership of birth. Turn value in working with Outsiders and not understanding of the business and I think that's because I didn't explain part two of my recommendation of having someone from the outside doing the deal and the execution of the Box itself. I think what that does is it changes the internal individual's role and what it is at the art execute. So the internal person doesn't necessarily have to be the person who executes on the deal. This is an angel who by rights really owns the business that they're about to require right and they are then responsible for the financial returns of that business and the execution of that deal structure. So I'm having a point person internally who understands the business is also I think a very important point and I just wanted to know that from grade born I think so individual there and I forgot your question, he's on lunch time break down sort of the skillset. Well one we talked about the challenges of hiring them in a Talon party even less than I'm also thinking about which rates are you looking for? And you can almost put this month. Between corporate event integration but in folks, I've interviewed. I found really fantastic interviews either had a operational or engineering background. That's right that brought a lot of interesting things to the table, but I've been told me that even some of these startup CEOs can be good potential integration managers cuz they understand all these different functions that are act with each other and come together. Exactly, especially when you're building a company down in a video on an hourly basis, right exactly. I mean, what are some of those traits? I mean those are a few but what stick out to you Rhema. I mean all those characters is I think a lot of times what happens is it organizations built so much into this role right though, like identified as individuals high potential individual for whatever operational leadership role and I would just say that I think it's important for organizations to take those handcuffs off of those those individuals. They are inherently high-performing individuals because of who they are. I mean those personality traits you can't log And I think just loading it up with all the other artifacts of whatever HR Capital strategies saying is going on at the moment it just it weighs down the role ways down the individual all you're doing quite frankly is putting a bullseye in the individuals back because you know, I've heard some people say that corporate environments are like Warfare, you know, they're not saying it's just fighting and you know guns know none of that but it's political Warfare and so anything you can do to take out all of that, you know baggage from the role would be I think a wonderful thing. I think a lot of people with a lot of different traits can can do really well in the role. I've met quite introverted types who barely move a facial muscle, you know, I've met Bollywood Stars types. I've met like all different kinds of individuals who do really well in the role and I'm not one to stereotype an individual because I think there's lots of experiences that are very pertinent to this role and function. I saw an improv You mentioned Bollywood star. I think the average person who me page him some of our audience advice. What advice would you give them about hiring in today's market? Yeah. I think my number one thing is that keep an open mind, right? Because in today's world is just changing so fast, it's not that everybody's a master at everything just like you are not I'm not others are not so there's people who bring in specific expertise look for that right? There is a specific page will who's extremely good at pricing right? I'm just making an example because I run through this in my past. It's like to narrow. I'm like what your last 80 of sucked because you didn't I see well praying I want to bring him in and expand your skill-set because you just don't know whether you really raise prices and sort of go up to chain or whether I will price is an increase by birth or by volume and that kind of open to that number to whoever is very heavily Mercury to processes and stuff like that. I think it's going to have a big challenge in the New World Order of integration off right? I'm just saying it's table Stakes also the ability to ability to sort of structural in a very creative fashion to create long-term value not just sort off next two quarters and then amount of the next deal as a lot of value in in in that something long-term because some of these revenues energy and business model deals aren't like sort of, you know Bank functions get done the cost and go home. I would also think that purist I am only blow. I don't think have a place in the New World Order. You need to have an agreement for 1 or more off the functions ability to pay off. Value and things like that. So if you need growth in want to gravitate into a business unit someday and be a general manager, that's a very viable path. It goes to the customers close to the product and save the deal also, so I would say be you and I'll just give a personal example. I actually took a job that had a job description that was two sentences and you know, I laugh at them because gosh, you know, that's that's crazy. But what I did end up doing is looking at the description and saying to myself, oh my gosh. This is a blank mandate. I can totally do this thing. I don't even know what the thing is, but I know I can do it. I have young children. I tell my kids and I tell my family members and young people just being you, you know, take a risk. There's never a right time to do the right thing. She just do what you need to do and take the opportunity and I think there are opportunities that are found in the market. I think there are rules that are available in the market that sometimes many people. Smith's because it wasn't written in the right way. It was positioned in the right away. So I would look for opportunities that are unique that give you a unique perspective because that's at the end is what I'm going to create the value differentiation and you so, you know you and your little different have a lot of fun because that's that's okay. I think it actually created for a very differentiated advantage in the market. What about sourcing if I wanted to get away from just asking my friends my circle and just internal thoughts are as another resource, but just out about looking around what resources would you recommend looking into? So I'm come from University of Chicago and back to have the Davis Center for leadership and strategy and they put on some interesting things. Like for instance. Once they have like a ballet dancer and they have the head of FBI in Chicago Bulls. About leadership and what it takes and one of the things I learned from that experience is that interesting people seek other interesting people and so I think having conversations and find venues where people are looking to find something different something intriguing and really selling that proposition. I think people get really excited by it. And I know I've been able to get some wonderful people through that those kinds of experiences and it really just bore out of you know, what do you do what's going on? You know, what's real is yeah, you know what, you know, what would you do on a Thursday, you know, so on and so forth. So those are the kinds of things I think that lead you to the conversations that gets you to an understanding of an individual and I think that's what you have to get to. Yeah. This is hard work right off totally agree with that. I think you need to also look in the unconventional places like Remus. We are not looking the conventional places red and the ability to spot Talent is that, you know, can this guy or gal? I identify Trends wage? They comfortable with uncertainty and ambiguity or tourists enough and they move as the deal requires, right and oh my gosh, so I have to I have to like interrupt you and just a second thoughts so important because this is Sookie deal individual is the case driver of the organization and not a lot of people understand that but Beauty on a point. That was a very bright in my head, but obviously didn't come out. But yeah, you're absolutely right you are the person has friends on or that's the number one race horse of the CEO and you have to drive that deal is nobody else is going to write everyone else is usual p&l. And yeah, I'm following a process and turning out twelve widgets a week always good. So yeah, totally agree. I get excited about that hundred people who do very well if you give them volumes of data to analyze they would powerfully job in two days. It's like so yep. Some job in two hours, right? And exactly that's yes right people like to talk about all we need this analysis. We need best data. We need that data and I'm like in ten minutes, you know, whether a deal makes sense or not, right? Because the way that you exactly structure it in the financial model would just the exact assumptions. It's probably not how it's going to come out at the end. The sausage is a little different at the end of the machine than what you put at the beginning it just that's inherent in the process. And then once you've done enough Selena deals with experience, you can say okay this type of deals. I need to judge just got Outta. Right channel doesn't work. Now you speak to the art of experience and I appreciate that the 305 forget either request for Marco if you share the hbr article that you referred to in the beginning. Yes. So this is managing yourself as human zoom out and buy Rosabeth Moss Kanter. This is in the March 2011 issue dead. And I love that article because it's like you have to be like two sided like one eyeball on what I need to accomplish this week this month now for the p&l and then the other eye has to be on my 17g. What am I learning towards? Where is this Marathon ending up working close to the hours. So last question I have for you guys is what's the craziest thing? You see that emanates hours. You gotta be wrong. Okay, so I was just telling this to kiss and and Rima the other day and individual plays also on this on this session and walk ins we were negotiating and a couple of years now and then we got into the negotiation the other party had brought in like very strong and hostage negotiators right season professionally trained hostage negotiators and integrators who capture all these bad guys have like integrated into the table and we would like dead. Dealing with here. Right but we went to the rigor of that was eye-opening and that deal didn't go through and then we had all kinds of repercussions thoughts on why this company was talking to those individuals and why they came at oh my god, let's point that territory because this was sort of everything about that was a little bit shady and I'm glad we got out and not got interrogated and weren't Acosta just weren't taking hostages interrogations of every day. How about you Reba? Oh my gosh. I wish we had more time in a couple hours in our hands or maybe a line or something. But this experience was in Boston and I say that way for a reason and that's all I'm going to say and it was a massage in Boston and it was a demolition business office and we had this pig and we put a lot of lipstick on this pig and you know, we meet several pitches and finally we got some people that you know took the bite so this guy comes in and he was laid first of all wage. Me nervous and like walking around peeking Through the Windows. When's he going to drive in once he driving how many people so I'm in the conference room and I'm looking out and I see this may balk black beautiful my gosh beautiful beautiful car. This man steps out. He is, you know balding and he's maybe like six foot seven and he's big he's huge and he's got a full length mink coat on and it's got jeans and boots and he's wearing pinky rings and he's with a guy and this guy and this is a middle of winter. This guy has on a wife beater and he's off jeans on and I'm like, what is this? And then there's two Escalades behind them would like to spin our Wheels going and I don't know. I'm just a little village girl from Lake Mary in society events see this. It was just unbelievable. It was pretty crazy. And then we sat through the whole reading where this guy kept saying you think you gotta do the deal on my okay? Our what money you gotta do the deal. It was it was one of them was difficult deals I've ever done in my life, but it closed and we sold the business and I'm glad it's my past but what an experience cuz I don't think I would have thought those individuals in my normal daily life in suburban Chicago land never happened. Yeah, right. I was like Wow mujhe video like no no no video the phones away like it was exciting the heart going a little but yeah, it was good though. They're called actually guys took anything in all the action used as time well, because covid-19 demedim a natural event that will be taken out of ebitda moving forward. So just you know, enjoy and do something fruitful. We will move Beyond this time compassion help your friends. There's a lot of people who need help and use the network to log. Exactly be good and be well, thank you. Great. Great guys, I appreciate it. Thanks so much. Thank you. Thanks so much for listening to this episode of m&a science. If you want to stay up-to-date on the podcast and all things m&a science, including our events. Make sure you sign up for our Weekly Newsletter packed Ami science.com m&a teams that use proven techniques deliver better outcomes agile. M&a is a science-based framework that focuses on a responsiveness adaptability and continuous improvements. You can view the whole book online for free at M A and if you're still using Excel trackers and old-school virtual data rooms that charge per page what a rip-off I highly recommend taking a look at deal room deal room is designed for collaboration with internal and external feeds off. Adeel room. To learn more you will also find lots of free resources templates ebooks guides. Thank you again for listening to emanate science. See you next time.
The Impact of People Experience on Deal Outcomes
"The. Key Som-. Patel and you're listening to science. Where we talk with deal professionals and learned valuable lessons from their experience. This podcast focuses on stories strategies, and what actually happened during emanate deals. Before we get started today I. WanNa let you know. I recently published a book called Agile Mna. We all know them in a process is highly inefficient, and there's no real standard or evidence based approach to completing Emma Deals Agile. Manet is a project management framework that emphasizes responding to changes, collaboration and continuous improvement. This means your team will improve identifying risks and opportunities during diligence as well as planning and executing integration, so you can actually deliver on predicted value drivers get your copy of agile emanate on Amazon or any major bookstore learn more agile. M. A. Dot, com. Today I'm here with Karen Eisley Karen is an emanate specialists and the founder of Eisley Associates International Nas Jillian based global consulting business, providing emanate advisory services to organizations growing by merger acquisition or other similar business transactions. She brings experience as an HR, professional business leader, a management consultant to every engagement, Karen spent over twenty five years working in house as well as for corporate and private equity clients. She recently completed research on the impact. People experience on deal outcomes today. We're GONNA, talk about how to be a good leader and A. Are you a daycare and? I'm doing great case on. Thank you so much for having me here. Thank you they. We can just start off with a brief background on yourself. Doing this for a long time. My first deal experience was actually win the law firm that I worked for Minneapolis. Saint Paul acquired another firm after I finished business school of the U. of M. I joined the US multinational and worked for the guy in charge of the HR aspects of. All of their mergers and acquisitions globally complete complete luck of the draw on that one over some time I left corporate and joined Mercer, New York. And moved to Australia Ninety five. The firm that was eventually by Mercer. Ultimately I was part of a global emanate practice at mercer until. About ten years ago when I set up my own business. That that I'm that I'm currently in now so like I said doing this for a long time probably. Seems more. Planned in the retelling, but as I think so carrying I you. You've recently published a really interesting paper on leadership. You've done quite a bit of research because you got a lot of facts and figures in here. Can you summarize what you've learned from all this research you've done? Of, course I can keep on. It's probably not a big surprise to you that this is one of my favorite topics. Currently in a nutshell, what we found is that people experienced predict steel, outcome, and leadership is one of two key predictors of people experience in terms of the specifics. What we found is that when people and this means involved not just employees when people have a positive experience in a deal deal with are four and a half times more likely to be met, and these odds go to twenty three times more likely when we cut the data to look at only deals where objectives were fully met or exceeded compared to deals. Compared to deals that did not meet objectives at all or destroyed value and look if there are any statistics gigs in the audience, the significance of both of those results. were. Point zero zero zero. In Layman's terms, one chance in ten thousand for each that those results happened by chance. After seeing these results, we ended up spending another eight months in the data. Really to see what we could find, that would be useful for organizations to know. So that they could take action to be able to improve. The results of their deals by improving. The experiences of human beings that actually make the deals work. One of the things that we found. Is that leadership effectiveness? Is a strong predictor of people experience in deals for example people experiences three times more likely to be positive. With leadership is not seen as a challenge in a deal. And five point six times more likely to be positive when leadership is not seen as something went terribly wrong in a deal, Kiki lavery like what is a positive experience. Great Question. always get that one and I also always get the question when you say me still active. What do you mean and probably the best way for me to answer? Both of those questions is to just give you a bit more background about how we did the research. We designed an online survey. We looked at one hundred ninety eight deals globally, more than sixty percent of these were cross-border transactions the responses. Responses that we received were from various perspectives both buy side and sell side and the primary role of the survey respondents range from executives to employees to deal team leads as well as members. HR heads as well as HR teams board members, and also included some external advisors. We took the simple approach of asking people to think about a memorable deal for them, and then answer some basic questions about it. Including whether or The deal met its stated objectives. We've measured this on a five point scale. With at one end that the deal destroyed value and at the other end, but the deal exceeded expectations. We went on to ask for open questions about challenges. What went what went wrong? What lessons did they learn and received upwards of twenty five thousand words of comments amazing really out of one hundred and ninety eight respondents. I think there was only one. That did write something to us, but to get to the question that you asked that encouraged me to tell you about how we did our research. We've finished up by asking asking about the experiences that people had. Specifically, we asked overall. How would you characterize the experience of this deal or integration? And then using a six point scale from worst experience of career to best experience with career we asked. How was it for you? We did give them opportunity to answer on able to say and then using the same scale we ask them to speculate for the majority of others impacted I imagine it would have been and had them answer on the same scale. Of course they were also able to answer unable to say surprisingly only a handful Declined to answer that, so everyone felt like they could basically. Predict or speculate how the majority of people would have been feeling in the circumstance of the deal. So armed with responses to. Did the deal. Meet its stated objectives and. What was the experience for? The majority of people impacted by the deal? We were able to use regression analysis to determine what extent deal outcome can be predicted by people experience. Can you define emanate leadership effectiveness and describe how it impacts the deals outcome? Allocation, I would say that emanate leadership effectiveness is really about how successfully people can exercise their personal influence in order to coordinate the efforts of others in order to achieve whatever the deal objectives are. That are set. And this is so critical for outcomes re some recent research actually shows that business leaders collective mindset is absolutely going to have an impact on deal outcomes I don't know if you've read any of Roger Martin's work, but he did did some research that was written up in in. Harvard. Business Review a couple of years back, and he focuses on the one thing that you need to get right in a deal and this research was so cool. He actually looked at deal success, so look at long-term success of deals based on stated objectives, financials, etc, and he also looked at what the early communications worse so, what was announced to the public what was announced to the market and the? The thing that he discovered absolutely blows my mind. What he discovered is that the organizations who focus on what they're going to get from a deal are less likely to realize the benefits of that deal than those who focus on what they're going to give or what they're going to bring to the deal, so this business leaders of collective mindset actually has an impact on deal outcomes how leaders show up. kind of what energy they bring, and how they actually role model what it is, that is important for deal. Success will actually determine the success or failure of deal. A big important driver is the mindset whether they're focused on taking from the deal or actually contributing to the deal. And everything that that entails and so think about it in in real life for example if you meet someone and you've you know like you get that feeling that someone's GonNa. Take some from you. Don't trust them. You feel a little bit weird about things. Whatever that's on the inside of them. That vibe comes out to you right and you go, should I shouldn't I should I. There's some sense that we have about whether we should trust someone or not, whether we should believe someone or not, and the same idea of this mindset that leaders bring to deal comes out in their actions, the words that they choose and how people how people react to them, and of course if we don't trust our leaders if we don't want to work for them. The the likelihood that we do what's required in the likelihood that we contribute in a way that helps deal objectives to be met are left his. It's the first time I've actually seen that. Research in the marketplace. There's not a lot actually on leadership in emanate. You're absolutely right there isn't it makes sense I think some of the things you're describing very fundamental you when you're in a meeting and meeting with somebody that just constantly talking about what they want from you. Versus someone that's more focused on what your goals are and how they can help you. I think that similar mindframe applying it to them they context. And, that an absolutely that absolutely translates, people don't talk a lot about the emotion that comes with Mea, but it's. Any kind of merger acquisition situation. It's a significant change for people. Right none of us likes to be changed. We don't mind change so much, but we don't like to be changed. We don't like to have changed force. Thomas and when stakes are high. People have that kind of fear based fights, light survival kind of thing. Kick in. And all that emotion gets tightened in this situation and so. The capability of leaders to manage themselves, and to be aware of that emotion and aware of that situation and other people. Is Really, really key to this. Research you mentioned so specific attributes that emanate leaders need and we go over them and explain why. Absolutely so. What what came out of looking at all of the? All of the verbatim comments from from people who participated in in in my research. A really kind of three areas of Ma. Leadership that are critical for effectiveness one is deliberate to is influential. Three is galvanizing. So. To start with deliberate when I say deliberate leadership, this is. Early in the game where? Seasoned emanate leaders assess they prioritize. They make investments to prepare their organization for what is about to happen to them. This significant change that's going to happen doesn't happen by magic, so whether it's your systems, your processes or your development of leaders or Just getting people in the organization ready to do this out requires this kind of deliberate focus, which is the which would be the first feature of emanate leaders, the second critical feature for emanate leader leaders are successful in the leadership. Is really about six influence so. Influential leaders these are the ones that are fabulous role models their motivational to their teams. Even in the thick of a deal and kind of the crazy hurly-burly that happens, there's still focused on building relationships. They're still focused on developing people one of one of the one of the. I think I said to you earlier. The how critical it is to role model, you can't have your business leaders running around with their hair on fire, worrying about themselves and being afraid for their own situational resisting change themselves because if they're doing that, they're not actually showing up in a way. That's going to influence. Their teams to coordinate efforts and work towards the deal objectives that need to get. So this influential emanate leadership is really that leadership from the inside out. It's from the heart it's. How do you get someone in a position where they can put? Their confident and comfortable in their own situations, so that they can actually show up for their teams in a way. That's productive. The third type of emanate leadership, effective emanate leadership is really around galvanizing. A team to move forward so this is like the amazing sponsor like being the best sponsor of a program that you could ever be. This is about getting. Everyone focused making decisions directing activity. It's actually about testing and adapting so it a bit wrong and adjusting fly and doing that quite quickly. And also being a great communicator, so what it takes really to lead from the front and take this whole organization forward are the features of a galvanizing emanate leader. If you had to pick one attribute that emanate leader absolutely needs above all others. What would it be? If I had to pick one attribute that emanate leader absolutely has to have. I would say that. It's personal credibility. We all know that trust is earned. and. We earned that trust by doing what we say we're going to do when our walk matches are talk. The flip side is if we say one thing and do another. We don't get the trust we don't have. The credibility and people aren't gonNA follow us, so if I had to pick one, it would be that. Interestingly, you're not actually going to find probably all three of those deliberate influential and galvanizing traits in one emanate leader that Unicorn emanate leader that has all of those. Perfect leaders out there. Yeah that's right, but the other part of it is. Probably unrealistic to expect but the other thing is, it doesn't matter right so as long as you've got. You've got those capabilities in the right people at the right time, so for example, the deliberate emanate. He kind of want that in your top decision makers and your your CFO and business will end your see if we oh CFO kinds of leaders because they're the ones who are actually going to need to make the decision and the investment. In development if you don't have those people understanding the pitfalls of a deal and the the the value of having an organization ready like they're the ones that need to be deliberate, your influential emanate leaders absolutely critical that you're frontline leaders have these capabilities. Our employees are people actually trust their direct manager more than they trust the top team? So this motivational relationship-building developing people kind of stuff is super critical. For your direct line managers keep Dunbar's research also shows that. This is a predictor of success is also those capabilities in the target company right in the cellar so someone who can influence people to come over and stay the course absolutely critical influential in the acquired business, and then you galvanizing leaders, those these are the ones. This is your top team. This is your project. Sponsor your chief executive that really needs to lead from the front. You know leading both the organization as well as being the face for clients and being in a position to make decisions and changes and choices again these this galvanizing capability also really relies on the success of the deal depends on in the end having someone in a position that can take it forward. And bring the troops along. With what do you think is lacking in leadership training? That's causing it to become a top issue for closing deals. That's such a good question. Do you know I think it's actually more about development rather than training, because when we do just do training work on things not to put down training, but when we just train people, there's an awful lot of focus on what to do. Which is fine. You need to know that. But not enough focus on how to be and a lot of people don't even think about that, so I can make my checklist, and like you can make your project plan. That has all of these Gantt charts and all of the stuff. That says what we do next next next, but that's not going to be enough. The the part that actually makes that work is how people show up. So you know that that confidence in personal situation, the commitment to. Relationships the ability to do what you say you're going to do. To be a great role model. Yeah I. Just that role modeling I can't stress it enough and oftentimes people aren't even aware of their own impact on others. So back to your training question if we do the development. And help people see the shadow that they cast as a leader on an organization and create that awareness. The organization is in a much better position. If they've got leaders that actually understand their personal impact on the others around them and link between that and deal outcomes. Hugging, somebody develop that like? How do you train somebody in that area? Fifteen years of therapy and. Kidding. Doesn't hurt. You raise a good question because. It's something that doesn't happen overnight, right? It's all of us in our lives. Go through a personal development trajectory. You know we somehow we get better at things. We get better at handling ourselves. We learn things we make mistakes. We make changes and how we interact with people and how we get along with people. One of the biggest challenges is howdy. Accelerate that so that you have a better chance of people leaders having their own experience be positive. That actually helps them makeup more positive experience for others. The trick to that is starting early so. There is no possible way. That in the ten minutes between when a deal is announced, and when a leader is meant to be behaving in a way that's expected to support the deal. There's no way in that ten minutes that someone is going to go from. Not being able to do that to being able to do that, I have. Funny Conversation sometimes with clients in the in the lead up to to working with them. and. One of the biggest challenges for me is to help organizations. Get started on this earlier. Than they think they need to. And they say things to me. Like well, we'll we'll. We'll do some leadership work. As soon as we know that we're We're more likely to do the deal. You know we're not sure we're going to do the deal yet, so we don't want to invest right now. Because if you know, we might not go ahead with the deal, my thought about that and my question back to them. Is Always will. Even if you don't do the deal what you know, how would you see this helping your organization and you see? The penny dropped because. These leadership capabilities. Are Critical for an organization full stop. They just get heightened when so much change comes into play such as in emerge or acquisition. What are some of the things? Leaders can do to prove employee experienced during. One of the things that leaders can do to improve employee experience. And? This may seem weird one, but do not be afraid of the emotion that you're going to experience. No one talks about emotions at work or very rarely. Do we talk about emotions at work, but the reality is this kind of change brings up a lot of stuff for a lot of people. If you want to improve the employee experience, you really have to lean into what's going on for them and not just ignore the stuff. It's kind of uncomfortable. The other part that goes hand in glove with that is around communication. Ten fifteen years ago, the research showed that you know organizations weren't doing enough communication in in deals, and that was one of the factors that was making deals fall over. Over the last ten years, organizations have gotten a lot better at that, and so you know there's a lot more infrastructure around communication and a lot more information that he's going not just one way, but two ways in an organization, and so with that is a good foundation, not being afraid of the emotion and being prepared to have the conversations about what's on your mind. Being able to sit with that discomfort or concern, is probably one of the most important things that leaders can do to improve employee experience. Sounds like this falls along blinds of empathy. You're right. You're absolutely right. Walk in their shoes absolutely. And not. Judge, people, for what is a natural reaction to a circumstance. People hesitate to share what the worried about because they are worried that something. Bad will happen if people know how they're feeling and so creating that environment of openness and. Kind of. No. Retribution, no blame, no punishment for actually feeling concerned or being worried or or saying frankly what a leader might need to hear. In order to help help them be better. I've wrote a little bit about empathy in the context of a and actually had an interesting interview with one of my Mentors Mark Colston? Published a book on the topic I'm curious if you had any thoughts about ways to encourage it and make these leaders more conscious about it. I think that I mean that. Certainly would be part of. Part of the. What's the right word curriculum topic? You know when you're actually getting getting leaders ready and doing the leadership development, not training, but the development to help them show up as a better leader all the time, and then some training to say well. How does that actually work in a deal situation? That's even more heightened absolutely need to build that into the empathy and also the personal awareness, because those to actually go hand hand in glove. You can't have empathy without personal awareness on the other side. Can employees do to help leadership understand where they may be locking. Give you leaders benefit of the doubt? Don't assume the worst and the reason I say that is that the embassy that you were just talking about goes both ways like that same kind of fear and concern and worry and heightened emotion that that employees are feeling. Is the same that they're. Leaders are feeling. Right everybody, all of these human beings with all of these human emotions are trying to work through this together and and figure out where to go, and so to the extent that it's possible to give each other the benefit of the doubt. It sets up a situation where then? Leaders can be open to feedback that they need to hear which will help them. Improve and do a better job to bring employs along. Does that make sense. Let Their guard down and be vulnerable. Yes Yep, and but it goes both ways, and so that kind of that chicken egg. Thing about you're not willing to let your guard down until you feel safe. And, so the leader actually has to make an environment. where? The. Their team feel safe to bring things up. Again this is different than just good leadership one right, but it's just that it gets heightened in in times of significant change like a like a merger. So. No one's going to bring up something big unless they feel safe to do so so back to that influential leadership capability that. Creating an environment where it's okay for people to say what's on their mind is critical for leaders. That you need to create the environment where employees are are prepared to speak up. And, probably the employees need to raise a little courage when hand. To be able to give the feedback where where it's needed, but in the end my view, it's up to the leaders to create the environment, and if that environment is. Healthy enough that people are prepared to raise issues than they should feel free to give feedback fearless, frank feedback in that circumstance. Right now you pointed a lot of your data and resolves back to how leadership capabilities in impact the success of a deal. How do you get the companies? To actually in their their executors have. Understand, that. My again, my I, Li- I thought on that is There's nothing like a failed deal to capture the attention. Of Senior leaders inboards. Back in the day when I worked at Mercer, my job was to go into the market and convince organizations that you know this is something that would actually help their deal. And this is something that would make their deal more successful. In making these investments, the return would be. would be positive. And with the benefit of global, marketing team and etc.. We did the research and we went out there to convince the world that that was something important to do. In my business now without the size and scope. I always look for organizations that have done at least one. And they know what what's going on. So, to help people understand, there's nothing like experience to teach and getting burned one. Is, probably the biggest way to capture attention. That sounds quite negative. But yes, there's there's nothing like a failed deal to capture the attention of organizations in terms of making the right kinds of investments. When we when we looked at the data in in this research recent research that I've done. I mean leadership shows up as the top issue mentioned. In all of the teams that had significant associations with employee experience. Was the word most frequently used when we asked about lessons learned. There's not a heap of research out there, but the research that is out there. That touches on leadership is something that. From where I sit is important to get the word out because stakes are so high. I have a personal view that nobody should be injured at work. And when when we think about you know workplace injury. You think about the wall caving in the. Scaffolding falling down or someone? Getting injured in a manufacturing, environment or something like that to me, the breaking a person's spirit at work is also an injury. The stress. On people that comes from the kind of change that happens with the deals. We. Should not be putting our people in a position of that emotional injury, or that that that personal stress that comes with this. and. In to me. Breaking someone's spirit is just as bad as dropping a wall on them. and. As. Organizations get more across that and war recognizing that I think. There will be more willingness to invest. Having said that there's nothing like the bottom line. That gets attention, so is four and a half times more likely to achieve your deal. Objectives are not of incentive. Notice like a failed deal always isn't a wakeup call because some of these companies have developed Ma machines that are purely financially driven. Off of just you know close the deal press release a bump in market CAP, and they just keep going, and eventually it gets to the point when when all this stuff. And it's a big mess because a lot of these companies in and don't even get integrated properly. I think there's. I some of those circumstances evolve with the largest requires. Some of the larger serial acquires are actually getting better at this Baynes done some research over the last ten years I've done a couple of studies that just looks at areas that that we've improved in terms of doing this and looking at the long term. Impact of growing by. On organizations that actually. Do this well, so I mean there is research out there saying we are getting better at it, but when you still look at you know fifty percent of deals failed to achieve the state of objective. That stat I hate to even fight it anymore because it's just been said for so many years, but the reality is the ones who are doing it. In a very concentrated way in a very deliberate way, do have a machine that. Includes all of the things that we're talking about this morning. Which is why they can, they can keep doing it. Look a research paper right now and. I think we could talk more about them fundamentals, because it's interesting how you laid them out between thirty execution and capability. Yep So when I originally did research. And came up with the four and a half times. More likely to be successful when people have a positive experience or Odds going to twenty three times when we just look at. The ones that really did well are the ones that really did horribly. When I looked at that I, got a little bit scared because I just thought like this isn't. This isn't another other research. People haven't published something on this and so I spent the next eight months. Digging deeper into that and looking at what is it that actually drives the people experience? That drives the deal outcome and from all of that came. Three fundamentals that really are that that need to be there one being clarity. The second, he said, being capability and the third being execution. In looking at what we found is flak leadership. Clarity is also predictor of of deal. Outcomes doesn't say let's define clarity because I I see you mentioned really the whole thing around. The, why defining that clearly? Allowed to hear your interpretation. And when I say when I say clarity, I'm really talking about two things, so it's clarity of purpose for the business. So, why are we here? What are we doing how we organized ourselves? How do we do things around here? What's our culture? What environment and we working in? and. How going about our business as usual. And then, as a natural extension of that, what's the deal rationale and except expected outcomes? For what we're about to do so that you're in a situation where these key messages to. Employees than anybody else that you need to influence and the impact on customers and partners employees is known. So we've got so when we when we're talking about clarity, we've got all of our business as usual business purpose outcome strategy. How we work in the environment that we're in. and. We also have the. In that context, the deal rationale and expected outcomes, and ideally what we want, is that deal rationale and expected outcomes to just flow naturally from why we're in business in the first place so that the key messages to people internally as well as externally. Make Sense. And that we're really clear on the impact of this deal on our customers, and on our partners and our employees, so we've got three fundamentals, clarity, capability and execution. And the clarity is about business as usual as well as clarity about dealer rationale. When we talk about capability, we actually again talk about business as usual capability. As well as deal capability, so our business as usual infrastructure, all of our enabling platforms, and as far as the deal goes our infrastructure, our resources skills knowledge experience to support that. And when we talk about execution, this is all of the getting done. So clarity is all about context. Capability is all about getting ready and execution is about getting it done, and if you imagine a ven diagram where clarity meets capability, this is where deliberate emanate leadership comes in. This part about what do we have? What do we need? How do we prioritize? How do we invest? How can we prepare for the deal? Leaderships level of experience into this. My first reaction to that is the more experienced, the better the more deal, experience the better. Because every deal is different if you've if a leader experiences a deal as an employee, so. We talked earlier about empathy. And this idea like if you've had a deal done to you before you leave through a deal, you're actually going to have a lot more empathy than if you've never experienced the deal my first deal. That happened to me. Was I was an employee and the law firm that I was in acquired another firm and I showed up. We see the culture of that organization was that we work for clients all week and Saturday morning we pop in for half a day and do all of the administrative things that we didn't do during the week and. Chat with each other and walk around and have cups of coffee and one of those Saturday mornings I showed up at work around nine thirty or so ten, o'clock to find a lot of boxes and a bunch of people that I didn't know walking around. Set Down in my room and went across the open area and stood in the doorway of a stranger, but I'd never met before and said hi I'm Karen. Who Are you? What are you doing here? What's going on? See who now is one of my best friends in the world? Explained to me that their firm had just been acquired by my firms. And we chatted. I didn't think much that. We just talked in then kind of went on about our day. I found out later much later from my friend. That on that morning. I was the first person. Even spoke to her. So ten o'clock on the morning of the day that you show up in, affirm your New Year new home. and. Some kid I was a kid, then some kid who? OUT OF CURIOSITY! Crossover instead hello. How not to do a deal, right? Yeah! That's a really good point. I like it in the beginning of your research, pointing out some of the the big challenges and problems with them a and. The one that sticks out to me is underestimate the time. And cost of getting human beings to do what needs to be done. So true. The the cliche with construction projects that always. Ends up costing more and taking longer than you expect, but really look at Manet. It's really comes down to the people, and it's very similar. It takes a lot more time, complexity and costs of getting people to do things. I. Mean I I. I was I was sitting with a client this week. and. The managing director of this organization Is High Level Guy. Loose fast cut short attention span. Just get done kind of guy, and then he's got this amazing person working with him. That's trying to figure out how to get this dumb and the mismatch between. What it actually takes to do that thing that you can say in one sentence. Gulf and again back to what I was saying earlier about you know, nothing like a deal gone wrong or a deal that you're struggling through to be a good teacher. Because as soon as organization goes through it, they. Realize that there's more to it than meets the eye. That's about leadership, but it's also. It's actually just broadly about project management and getting getting like like like we said getting humans to do what it takes to get. Get something done. Get the outcome you expect. You're right. You also make reference about timeliness of things then that's another shortfall that often happens. Yeah. Yeah, I, mean and this stuff I mean all of the things that you're bringing up a true for any project or true for any major change and I think the kind of the rule of thumb about this is when you're doing it in a deal scenario because of the heightened emotions that happen. The degree of difficulty just goes up. And when the degree of difficulty goes up, the time stretches out, or the stakes are higher right because say the One of the one of the requirements of your deal, is you. Will. Need to meet certain objectives in that actually requires certain people to be available and around still with the firm, so you don't want turnover of the people that you really need. You also don't want to lose clients. And to the extent that people. Matter to keep your clients that will absolutely drive whether or not that deal is successful. And if your people are. Triggered emotionally. You know afraid, concerned. Worried distracted dusting off their resumes. and. That's what happens. Your best ones have a lot of options, and so they are your biggest at risk to go the return that you expect on the investment that you're making in steel. GOES INTO JEOPARDY as soon as That timeline starts creeping out. I like best about this. Paper is the end of it where you have the summary of different tips in ideas and how to overcome these challenges. Yeah, I, that's one of the parts that I love as well and those top tips from the trenches. Literally have come from Barbados comments that people wrote in when they completed completed the research survey that I that I sent out, so we don't have time to go through all of them, because there's quite a few in here but Bernie listeners. That's gotten this far in this interview There's definitely going to be a link in the show so that you can find it the paper yourself a glance at it and make sure you find the checklist of the the back with all these little tips and I find it really valuable to wrap things up. And what would you say are the top tips that you would emphasize for anybody that wants to improve leadership their next emanate transaction. It will look I will I'll defer to to the wisdom of the crowd on that one and just share. Share the tips that. That case on, you just referred to The ones related to leadership I tip invest early in Manet Leadership Development Opportunities for senior staff. And this includes work on business cultural differences. Second tip prepare leaders to sponsor complex change. So they can skillfully lead their people through it third tip. Is ensure that leaders are experienced, visible and involved. With the capability to effectively remove barriers to deal objectives. So those are the top three. And then there's kind of a side one. That is probably worth worth saying. There's a couple of more practical rather than philosophical tips. One is from day one have only one liter per division sounds obvious, but that not knowing who to follow is actually a real. Challenge if you if you had shared leadership. And the second one is moved swiftly shift at any executives that are not aligned with the future culture. So if you've got anybody, who's not role modeling. The behavior that are expected for the future. Move them on sooner rather than later. If you can't. Change their behavior quickly. He can't change. Their mindset quickly moved them on and go forward without them. The negative way to end, if you. Know I think it's a really good point. Because I talked to Keith in a recent interview on the same topic there. People hesitate to let people go on this early indicators to whole. A. Absolutely and we. I mean. The thing that I have to overestimate your ability to change someone. You overestimate your own ability to manage situation and. If, you're getting feedback if you're getting the VIBE that it's not working if you're getting chances are, it's not and. People will be looking at you as a leader about what you're GonNa do about that so when we go back to that role modeling thing, which is the most critical part about this leadership right when you go back to the role modeling as a leader in the business in a merger. Everyone's looking at you. And everyone can see that something's not working, and they see you not doing something about it. You need to think really hard about what that message sends. What messages that sense. And Be Prepared to act. To conclude. How would you position why any of this matters? What we learned is that people experience makes breaks a deal. We learned that leadership as well as clarity. Makes a breaks people experience we learned that culture presents the greatest challenge. And that capability an execution are just table, stakes and so. If an organization doesn't have these emanate fundamentals covered. It's an uphill battle to create value from. Their deals and interestingly win. Objectives are met in spite of ineffective practices. Usually, this is at the expense of people in some form. If an organization takes a shortcut, they're gonNA leave. Leave value on the table. and. Even when they meet the milestones that they set. If they don't attend to these things. They're probably missing opportunities to further improve. On their deal outcomes. The, picking up on a lot of lost opportunities. Absolutely, and it's funny. Those things don't even get. You know they don't get recorded. You know like wh what gets measured gets done when you ticking off your things on your project sheet. the best the best. Practitioners? Get that leading anemone. Program isn't about taking the boxes. On the charts that come out of the program office, it's actually about working in between and understanding the opportunities and bringing people together to. To actually create create value that you. Can go beyond what was what was expected. Yes, I would definitely agree with that. Thanks. Thanks for having me. Thank you for taking the time to explore the world of Manet with our podcast. Please subscribe for more content conversations with industry leaders. He like our podcast. Please support us by leaving a five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by email. It's Qissan K. ISO. At deal room dot net. AMAS science is sponsored by deal room. It project management solution for mergers and acquisitions. Additional educational content is available on deal rooms blog at deal room dot net forward slash blog. Thank you again for listening to emanate science. See you next time.
How to Best Protect a Business Case in an Acquisition
"Key Som- Patel and you're listening to emanate signs. We talk with deal professionals and learned valuable lessons from their experience. This podcast focuses on stories strategies, and what actually happened during emanate deals. Before we get started today I. WanNa. Let you know. I recently published. A book called Agile. We all know them in a process is highly inefficient, and there's no real standard or evidence based approach to completing Ebony. DEALS AGILE MANET IS A project management framework that emphasizes responding to changes, cleberation and continuous improvement. This means your team will improve identifying risks and opportunities during diligence as well as planning and executing integration, so you can actually deliver unpredicted value drivers. Get your copy of agile emanate on Amazon or any major bookstore learn more agile M. A. dot com. I am here with Ben Sutton senior manager corporate development at NCR Corporation Ben's been working for five years on the buy sell side and acquisition financing. Today we're GONNA. Talk about how buyers protect themselves and their business case in an emanate transaction identity. Then I'm doing well. How are you doing well? Can you maybe kick off with just a little bit about your role NCR? So I am a senior manager in corporate development at NC are I've been here for about two and a half years I'm on a small team that focuses on executing leaderships, inorganic strategy at NC are so great, my job between two categories, really pipeline, management and execution. So unlike many other corporate development roles. My job definitely does not focus as much as deal sourcing. He'll come to US via bankers or or strategic plans developed by leadership team members, so with that, said my job around pipeline management is really managing the relationships with those bankers, and and working with those leadership members to really identify what we want to buy or what we want to sell as part of their overall growth strategy, and then on the deal execution side were talking more internal processes coordinating Adila Jen's. Jen's and any type of follow for post closing is what kind of deals have you worked on? Yeah, so before NPR worked in investment banking and I did working for development at a different firm as well before NC are so I have some advisory experience as well as some corporate development experience at a different firm, but NPR's been the most active you know role that I played on in terms of. 'em In a, and and here at NC. Are you know we've announced a couple of deals? I've been here, but couple that I would. Highlight is St- stock with acquisition and way twenty eighteen are jet aquisition. Twenty eighteen or three acquisition in twenty, nineteen and our. Acquisition in late twenty nineteen, so all those are acquisitions and. My my parents definitely is more around the acquire inside of the deal versus divest or even merger, technically Jay was a merger as a public deal, but even then it was still in the structure of an acquisition was like the hardest thing for you. When you're doing these deals, hardest thing would probably be balancing all the many items that are are many processes. They're all going at once I I would say I didn't hear. Others are the processes you know getting internal approvals, but then the other part of the process, obviously managing the diligence process and managing the negotiations and doing any one of those things is somewhat difficult, but. But managing the entire process all at once I. Think Make A. Tough situation at times, and which is why sometimes you hear it professionals working long hours s a lot around the actual execution and project management of the deal when you have to take grain of all the details. Yes for sure. So what's the process? Look like for executing transactions NCR. Every corporate development being at every you know, say fortune five hundred has a similar process to this business I would imagine somewhat standard, but normally the deal comes from us, as I discussed before either from that investment banker, or reaching out to potential seller and saying we're interested in your company. You know that companies identified then we, we begin negotiations around a mutual nondisclosure agreement or an and da so. Interested, in having an acquisition discussion, we WanNa talk about confidential information, so let's execute a mutual nondisclosure agreements, so then once we execute that Manson presentations with the seller and gathering data this point as possible as they're willing to give us most for us. Mostly it's around getting technical information and financials as well to the extent. They're they're willing to share. And then us you know taking that information and developed in type of business case around what we can present, and and what kind of return we can provide for NPR shareholder so. Once that is done. We go to what we call our investment committee, which is really a subset of our leadership team, and we present our findings to date with the business case and then. Tell leadership. This is what we WANNA do This is why we want to do it and we would like to, and we see that process going in this manner really what we get approval from them. We begin discussions around a letter of intent on non-binding letter of intent or l., A. Y. You know that process can take a couple of weeks even a month. Depending on what she negotiating items is important for the seller. One that's finally executed. We actually will kick off the deal and what that means is will really begin to hire outside advisers including lawyers, accountants, tax advisors, potentially other advisors as well depending on the transaction. And then we kick off the deal with those advisors in our internal diligence team to discuss what we're buying and what we look and what we think. Confirmatory Diligence looks like so once we'd kick out. The deal confronted toward due-diligence kicks off and we. We end up doing weekly. CHECK INS on on progress, and we get as much data as possible from the seller. Throughout that process. We're getting updates from all the teams on what's happening and simultaneously during that process. Process we end up working with the outside legal advisers to begin the drafting the definitive agreement, and we start taking due diligence findings and start factoring them into the definitive agreement as necessary. Once diligence has completed. We present really our findings back to the what we call our investment committee again, which again is our subset of our leadership team asking for approval at this point to execute a definitive agreement once the investment committee agrees with the terms of the deal, we. We continue to negotiate that definitive agreement to really the last last minute finalize all auxiliary documents and signing looks right, so you mentioned several different legal agreements than I'd like to just take each one apart and walk through the purpose of each of the legal agreements just like you discuss. Maybe we can start off with the mutual NDA. Yeah, so kind of I discuss. The mutual nondisclosure agreement is necessary for every transaction to protect the protect information as much as. As possible, we always try to make it mutual. We're trying to protect NCRR's potential pump initial information as well as the targets which helps crazy about more valuable conversation. When we set up management presentations, and like I said before that takes maybe a couple of weeks, but it's not a huge negotiating item. The next thing I would say is an indication of interest real quick on the nondisclosure. What like things would actually get negotiated on it because I know that? When there's more stakes while times. He's NDA's. There's little things in there that that you go back and forth on, and I'm kind of curious to know if there are certain things that you see that calmly negotiated or would come up in a Negoti in India. Yeah, yeah, that's a great question. Well, there's there's obviously a couple of them. So the main sticking points would be the length of of holding the. Confidential information. So how long is? Are we going to maintain your information confidential as well as a period of the actual disclosure? Of the actual agreement, furthermore, there can be other things like non solicitation of employees or customers, and generally there's negotiations around whether you know we, as a buyer can can go to those employees and try to hire them if the deal fails or go to customers. The deal fails as well I mean. It obviously depends on the situation, but from a buyer's perspective, we generally don't like it. You know any of that language in there, but it's pretty calm and from from the seller Gotcha, so they're protecting themselves for all these different scenarios that could happen completely outside of this deal discussion. As well as their, you know normally this time particularly, if it's a marketed process, a business that is being marketed by an investment banker or some other broker. They know we're one of many buyers so i. if the deal deals with us, they're going to want to protect themselves as much as possible. And so, but on the other hand were not gonNA. Find out for a lot of stuff. Right so there's a balancing act. Yeah, those are some things. For an indicator of interest for an indication of interest, yeah, so this would only play a role in actually a feel that is being marketed. We're not going. Wait are not think. Send over an indication of interest for business, where if not actively being marketed by some banker broker. Instead what happens is you know we generally go straight to the letter of intent. And in the case that it is being marketed by the banker broker, our you know, we have to give kind of an initial read on what we think the value of the businesses the price will be in there, but it'll be a range of prices, and there will be other high level terms of how we see the transaction moving forward, but it will, it will obviously be non-binding, and it is not the Goshi that is just a bid sent for moss the buyer to relax. Or so an Iowa essentially as a tool that investment bank would use when staging out there process. Because if they're marketing a company, they might have some very generic teaser. She just to start collecting different interests, and then from there they would invite these different parties to submit A. State's a formal interest. The sound about right. Yeah, that's correct and sometimes that whole process. Outlined in a letter, but we call process, letter and investment banker will provide for process letter, and will require an Iowa and X. State, but then also our letter of intent at later dates, and now if you're pursuing a company that isn't marketed through a bank, you typically do an NDA and you're more likely. Go straight into an ally correct, or we would end up tone deal before we could get to the letter from. Gotcha so if it did move forward, be letter, or just deal is. So, let's talk about why. So Litter L. ally being letterman intent. We make them non-binding. They are similar to an ally, but they have more concrete terms to then. As well as they fixed price show, they'll have fixed. You know not fixed I should say they will have certain items that are listed that will be further negotiated during the actual diligence process, but it will be S- will be more of an outline for how that negotiation will go, so things that can be included would be the actual price as we discussed the exclusivity period, which would be the time in which we as the buyer have exclusive rights to just learn more about the business, and not reaching out to other buyers. there will be discussions on hold back. And escrow accounts or reps and warranties, Insurance Sheri- There could be. Discussion there around how financing the transaction as well as Any type of networking capital or completing tash mechanism, so that's not a complete list. That's some of the main items that'll. You'll see their discuss high level how we're GONNA approach it during the actual. Diligence profit? What break-up fee is that going to be included in a ally? Yes, yes, that would. That's another good one to include. Now this legally binding interest is one right. If there is one yeah, but this is a non yeah. This is normally you know from a from NPR. Standpoint Of other large buyers, you know we're focused on a non-binding at this point of the process. But now if you did have like a break-up fee and things like that, would it be a more of a binding agreement? Yes and on top of that I would say that that kind of thing is more associated with public transaction. Right in which. Has almost completely different process than already described and that's largely because you know their shareholders. So that's a whole. You know Kinda different situation from normally what we do, but yes, you're right there. It is binding. There will be some type of break up the Gotcha and then This is where most of the negotiation happens is right here on the L. Away. I would not. I would say that there's a lot of negotiation that occurs at this point, but I would not say that this is worth the most is I would say that when you actually get the details of the definitive agreement. You're really GONNA end up negotiating a lot of those terms a lot more in detail you know there will be a couple very big coins to negotiate the otherwise stage, which can include price which can include. You know what hold back. We're GONNA aim for and other things like that, but there's also a fair amount of negotiation that occurs during actual. Definitive agreement the the big terms right the prize the time famous you the. Other Day Yeah Yeah Yeah. Yeah the big terms let's let's say that okay, so then that's fair, and then in your purchase agreement or as we referred definitive agreement. We're going to iron out of those details. which may be a lot more little things to negotiate, but the the larger general terms are all going to be outlined to the L. A. Y.. Yeah. I think that's fair. Cool. What's like the thing that people go back and forth the most own in an alloy? Say obviously the price, but then also be escrow accounts that are going to be set up the networking capital mechanism, and how that's GonNa be addressed. Probably those are the three main items I say cool now from their. The the big main event is going to be our UH purchase agreement also known as the definitive agreement. That is correct. Yeah, yeah, I think there's a few ways to ago about that as well right and so. The agreement will reference what's in the letter of intent, but this is the actual amount where all the details are hashed out on those three main just mentioned as well as. Anything else associated with the transaction and what the buyer! Are GonNa want They're all GONNA. Have many artillery docking incidents well? To support the definitive agreement, so it. It is a you know long part of the transaction process. Now he's one of the things we referred to earlier is the private versus public transaction I with a purchase agreement differ between public and private. The of those agreements can be pretty significantly different, and that's in large part. Because in public transaction there will be no form of reporters for the buyer. Instead what happens is at time of close. There really is no way for the buyer to come back to the seller in recover any losses in the case that there are any losses furthermore in in a public transaction. You're going to have different types of agreements for example you'll. Likely have a merger agreement instead of say stock, purchase, offering men or A. At the purchase agreement as well as we'll come documentation that needs to go to the public shareholders which can include. A tender offering cereal so honestly the public transaction discussions potentially for another podcast, so and I'm focused on the private acquisition. fishy outline the difference. I, even looking at a private transaction and that agreement usually see two different types asset in stock. Could you explain the differences between the two? Yeah, and so and technically to also have a merger agreement as well which there's some legal differences between a merger agreement in. Stock Agreement but there they have a lot of similarities. Between Asset and stock. We're looking at at that. I would imagine most buyers are going to WANNA do an asset deal, and this of course means that the buyers only buying the assets. Of the business, they're going to outline in the purchase agreement. What assets they are requiring, and then what assets they're not requiring as as well as what liabilities they're acquiring, and what liabilities are not. Acquiring which? You know hopefully should allow for a cleaner looking business. kind of close for the buyer. There's also tax benefits to an asset deal that can be favorable to a buyer many times you can write up the value of any fixed assets or or inventory that that you are actually I don't think in only fixed-asset say you're buying and then Daqing. 'cause increased depreciation. That's GONNA. Go on your. Income Statement Post and lower your tax reliability moving forward as an example But one negative for the seller on the acid side would be. Most sellers are going to have to go through some form of double taxation during an acid deal, and and that's because the seller will pay a pack on selling the assets themselves then also pick tax on paying a dividend to themselves. Post the transaction because the the legal team post closed will remain after NASA deal, so they're all this money that's paid from a box that we're going to that legal entity, and then that legal entity will have to pay dividends to its shareholders of which in a private deal may only be a couple. There are a lot of times. There can be double taxation asset feel. so talk the on the other hand is A. Lot of times more seller, friendly the fire has to acquire all entire legal entity and all assets and liabilities associated with that legal entity, but there are some benefits to which can include if you know in in the hack from if there's a net operating loss that the seller has it will come with the with the business who shares of the business it will not generally speaking. It's not gonNA coming in asset deal, so if you're buyer in net enters value to you of any of the net operating loss of you know lower your tax liability moving forward. Also you know in contrast with an asset deal you're you're looking at. No taxation for sour, generally speaking instead they pay one tax on selling the share of business, some type of capital gains tax whether it's an actor or stock. He'll is going to be negotiated though generally speaking at the time of veteran of intent, not at the time of the definitive agreement, so it's interesting. There's a lot of various tax implications around how you're structuring the deal I recently interviewed a few folks on the HR side of integrating Emma deals, and what was interesting was there input in that decision based off of how the employees are going to be carried over post close because that could actually. is on what the challenges are going to be there, and also, if they're international in various different countries, and then also, if you have folks like on sponsored visas and things, that's where one scenario may May not allow them to be able to continue that same level of sponsorship, so it's interesting to see how some of these other factors outside of tax implications can affect that. On how to structure the deal, yeah I, the fact on from an HR perspective to that in many cases an asset deal. You actually have to hire the employee on day. One the acquisition, so there's an entire other kind of work strain that has to happen for the buyer around on boarding. These individuals really on day one on the in stock acquisition. That doesn't necessarily have to happen right. The those employees will remain part of that legal entity that. The buyer just acquired and so there's a longer process to move them over to. You know from an integration standpoint. Move them over to the buyers, systems and stuff, but the NAPA the most of the time you you, you end up actually having to fire the the employees that close and hiring them kind of on a simultaneous basis. Yeah, so that's of part of why There's a lot of things factor there on the HR side. Apple, what are representations and warranties and the context of a and why are they important? Definitive agreement, you're really going out on what is going to be bought and transferred from the seller to the buyer and what representations and warranties. are that they per precisely described the state of the business. And circumstances of the transaction to the best of the sellers knowledge, and sometimes you know there are things there are legal items called or legal -nology, which is called. Knowledge Paul Fires where the represent. The seller will try to represent that they only know so much about certain facts or of the business, but That's how negotiating standpoint, but anyway these these facts are arrests are traditionally broken into two categories, really based on important, so there's fundamental reps and our general reps fundamental are more are the most important going to general wrestle, so fundamental wraps can include facts such as. The sellers. Authority to sell the shares in the first place. Title. meaning that they hire business. And it could also include capitalization of the business who who owns what and other negotiated items where general reps are far more encompassing which include financial business employee benefits, customer and vendor contracts insurance policies. ETC really build them one other that I would highlight within. The you know set of facts or or representations, more TS our intellectual property rights for if you're attacked by in particular and I imagine that it could occur in biotech or some other industries as well. As what trump property is kind of the core of what you're buying and that means you want to protect it as as much as possible so a lot of times those wrestle fit somewhere between fundamental reps in general. got it and then these rats and warranties they would emit certain identified rhys right. They wanted school. Is Certain identified risk right? They would say that. Here's the risk we know about it. We're GONNA disclosed about it, and then we can talk about recourse later later on, but here's a risk. Let's disclose it in. There's the disclosure of letter to disclose stuff that the they no doubt as well as in terms of Brits as well just other fact that you want to expand on you know financials not going to sit in the main body of the purchase agreement instead they'll be in a disclosure, so any identified risks should be disclosed in that darkening called the disclosure wetter schedules now this is coming from diligence reports. Yeah, as it usually a third party or Can Your internal ones count? Yeah so it can be both right. It just depends on what's identified. Say You have say to seller did not know about some tax liability because they were not. Compliant in sales tax in a certain state but through the diligence process our tax advisers found. That that issue either needs to be satisfied before close or are or needs to be disclosed properly in in the disclosure letters. And then there would be some identification process for us as the buyer win that Tax Authority comes after the bye. For whatever that liability unit necessarily be incentivized. Disclose all this stuff. I I think the the less is better for us, the buyer and I. Want as right. You almost had like on yourself. Saying Hey, we found this thing, but you know we're. We're GONNA. put it out there, so we're. We're not covered on it in our policy versus thinking. Yeah! I I guess I would push back. In some ways, best practice would be disclosed as much as possible because you know if we're a year end after acquiring business, and some liability didn't come up from diligence, and it's not addressing the purchase agreement Hopefully, there's some type of language in the purchase to protect ourselves from that liability that come that came up. I mean in some cases unrest like like those that you discuss are not necessarily covered as part of the reports process, so I think I would summarize disagree. You would want to dispose much as possible. Okay interesting. Yeah look at the other side where let's keep the known unknowns unknown to. Me The seller may not want to try to disclose well. That's probably not true either shows gonNA. WanNa disclosed as much as possible as well because that protects them right so they're. They're explaining everything. They know about business as much as possible. Including any potential liabilities attach them. And, if if you can't go against something, ideally, there's some wrapped in the purchase agreement that is going to protect you you as the buyer that so you know of an example I guess could be you know, and this is oversimplifying it, but there are no. Tax Liabilities could just be very very simple Rep. except for disclosing, the disclosure fled right, and so if we delete the except for wasn't a disclosure letter. been you know the risk in that case would be on the seller, 'cause the buyer would be able to go after the seller is, there was a ability I think it's in both parties interest to have as thorough of a disclosure lever as possible. You're good guy. Do deals with so mechanically. How is identification recovery addressed in a purchase agreement? Yeah, so post closing transaction. Any of these reps are facts can basically be proven to be false in some manner or other in in the phrasing for that as a breach of a ranch so again, fix fixated on act liability here you. You. Know you identify some tax liability that you know was unknown. an undisclosed, and but the rap indicated that there was going there was no liability in this area. And so. Our tax expert or subject measure matter expert would identify that liability calculate the total losses associated with it and. Corporate Development as well as our legal team know that that's occurred one. We've identified that potential loss we there there will be a process in a definitive agreement on how to make claim on that potential loss, and it'll be outlined, and it's specific to every deal, but normally it includes some type of letter that has sent to a to the seller rep of the of a seller, and then they have a certain amount of. Of Time to respond to that, and then if there's any dispute about the amount, there's a resolution process, and that's going to outlined in in the in the definitive agreement as well in there could be a third party arbitrator that that comes in as well in terms of recovery, though there's a couple different message over coverage, so at the time of negotiating both the letter of intent and the definitive agreement, these will be main areas. Areas of negotiation, so the first one is a whole back. Let's say and so what happens is at at closed. A portion of the purchase price will be held back from the seller, and it's just held with the purchaser of the buyer, and that money is held for a certain period of time, and it's it's held, and so the the amount end and time it's being held is have been negotiated item and so that could. Could be you know funds for recovery? The second source of recovery could be an escrow account to be set up so a a third party agreed upon escrow town. You know among the bank or sometimes law firms themselves will open up. The escrow accounts on behalf of their clients at time. Oppose instead of the money being held with the buyer, the money will be funded into this separate escrow account. There'll be a process in which. The buyer has to send a letter to the Selah. REPETITION also sent a letter to whoever's the agent on the escrow count is. And then that will be your source of funding for any loss. And then the final way and a little bit newer way is what's called warranties insurance, and instead of funding is Pacific escrow account or holding back certain amount of the purchase price? You make an agreement. Policy Agreement wasn't insurance company and you end up. Funding a premium and retention. Or deductible with that. Was that insurance company like any other insurance policy that that would exist out there so. the premiums than we pay the closing. The deductible is paid at the time of. Of making the claim of whatever breached so. Really just depends on the situation. and all in in some cases you can have all three methods being used as your source for covering. Our Reps and warranties and other items subject to different limits of liability. Yes, January, they are, and so that's enlarge part why day are categorizing different groups, so fundamental wraps are GonNa have the highest women of of why they are normally capped at the purchase price sometimes they have no survival, and then they indefinitely and. And so I, if if someone lies about or not necessarily. Misrepresents. Titled to business. That's fundamental what we were buying, so we should we as the buyer should have? Full rights to reclaim the. Entire purchase price that. We that we paid to acquire this. general reps on the other hand are GonNa. Be More. Heavily negotiate it. In, terms. Of. Liabilities generally could be. women to to. Whatever hold back or escrow account? That was set up. You know the total amount. That, that's that's there. would be the the limiting factor. We can't go after the buyer Tanakh go after them. Beyond The total amount that's an escrow or the total amount that was held back. or it's whatever whatever's agreed upon with that direct insurer in the case of reps and warranties insurance the one caveat, obviously Ip wraps being somewhere in between fundamental and general reps, and those generally will last longer than the general laps they'll have a higher cap somewhere in between the purchase price and the escrow amount or that hold back amount, and that's all he negotiating point during a definitive agreement. finally I'll mention the fact that a lot of this women have liability. Discussion has kind of changed over time. You know historically. There was in some cases either no captured. All reps were just kept to the purchase price, and ask her accounts or hold back for only setup for easier recourse, we legally speaking so you don't have to go through any arbitrator or any other type of process to make a claim and you know the funding is there in the case of NASCAR, hold back or rushed Martini Insurance. But in the case that there was a bigger breach could go beyond those amounts over time. The market has kind of moved more towards Selah. Friendly kind of environment and this is 'cause you know. More limitations on one of general reps and it's why you see so many you know agreements, or you know cap that. the escrow amount order the holdback amount or whatever is agreed upon with the insurers, so you know just something interesting to think about well. How can sellers protect themselves from small-claims? Yeah, so a lot times that'll come up in the case of a buyer making. A relatively small clean. That's not really material to have businesses operating. You know some financial, countless, slightly misrepresentative, and there's some loss associated with that or visit various small tax, liability or someone's HR benefits for properly process. Some employees owed money or something like that just a small example, and so generally what will happen is that there are indemnity baskets set up in the definitive agreement, and so that means that the the claims have to hit or losses have hit a certain amount before you can actually you as the bar can start making acquaintance so it normal, they normally come in kind of two forms, either, but the a true deductible or or in Tipton Basket, so and the case of a deductible I it's more akin to car insurance. You know the claim, the law itself has to be bigger than at the duck, the ball, and you the buyer, or maybe you split it up seller, but again further negotiations of transaction will fund that deductible, and sometimes there is no funding of the deductible you know as it's not necessarily going to an insurance company is just what's agreed upon in the transaction, so you Kinda just lose out on that amount of money, right but any dollar you as a buyer. Have Right recovery tipping basket on the other hand. is more buyer friendly. The buyer will be able to add up all their losses from all claims and and then once it hits that total now for the tipping basket, the entire amount is reclaimable by the the buyer, and that's why it's called the tipping basket. It'll KIP. Their recovery will tip over and you have you as buyer will have the right to reclaim. All all. What's an example of a more unusual reason, holdback or escrow countless set up show kind of what we were discussing earlier bow. Risks or unknown risk. Sometimes there are risks that are identified that diligence has that diligence has identified that the buyer will want to protect itself from and so it's specific. Count will be set up for that risk, and so you know an example I'm seeing I'm seeing more often. Would be an escrow account set up around data protection rights so Europe. The European, Union recently passed the general data protection rights law in as part of operating or doing business in Europe, and because of that any business that has any gentle exposure to to your pass to be compliant with those those rules and. There are some ambiguity on what truly is compliant, and there's a lot of wrist around it, so a lot of small sellers may not necessarily have the proper protections in place, or or may not have done an external party audit of their data protection policies. We will we or any other buyer will. Identify that? The diligence, and then set a specific escrow account with this known risk in mind to fund both a audit of of the data protection processes as well as any remediation that's GonNa need to be corrected to be compliant with with Janey PR. It's it's an ongoing process, but you know every deal is going to have individual escrow account oriented protections, and then just in case there's a known risks. Risks identified and we want, and we almost certain. We're GONNA have to spend money on it, but we being the buyer. We know that money is going to need to be spent on it, but we're going to try to negotiate with the seller how to properly funded writing from our from a buyer's point of you're GonNa want anything they've done in the past. He properly protected post transaction. That's just one example, but there's you can obviously set one up for for tax potential issues. You can set one out for any other legal issues. Would you saw litigation that came through? It's specific aspirin for that so obviously very specific to every transaction. That's cool, so you can actually use escrow as a tool to overcome major known risk exactly. It'd been has to be agreed upon their right with the seller, because that extra money is essentially deducted from the purchase price right so you know the other option would be instead of sending setting up that escrow town, or or holding back a certain amount of money, just reducing the purchase price at that point I place, so it all depends on what the seller and the buyer can agree to. It. If you just straight up, reduce the purchase price your year end up, not you at the seller, not going to be able to cover any of it and if you do sit up and ask counter a chance that not all that we'll be back right, and so you will have some money that comes back to where the major risks of not properly negotiating identity measures in purchase agreement. Yeah, so every transaction that a virus can work on. There's GonNa need to be a business case set. Set up in really that's around developing proper strategy and and projections associated with the business or really the projections in be associated strategy with acquiring that business and they're those projections are going to be used towards the modeling effort from a corporate standpoint, so you know to look at the DC value any accretion dilution impacts to off as the buyer Obviously, we're public companies, so any business when we buy is going to have some type of effect to our earnings per share. And so, if you're not properly protected from any of these items that we discussed. That say those are expenses that can directly hit. The business case that you didn't plan for and can material change. The DCF value or how creative or dilute as the businesses right you know indicates that the expense it can. It will only make it more diluted so That's that's something that's pretty negative that you know. We're not GONNA WANNA. Tell leadership. Leadership's not gonNA WANNA. Tell Him Besser so it's very important that any buyer protect themselves from the these issues coming coming up. What are like some surprises you've seen in some of the deals you've worked on. Casually, says some you know I think in context of. This discussion a lot of times. What will happen is an in back to the how much you're disclosing. Even have someone not properly disclose everything, and then you are exposed to something. Maybe you didn't properly protect yourself. In in terms of reps and warranties and You know that could happen in terms of. Asking for your top ten vendor list but it turns out that. Another vendor learns that a big buyer acquired small business learns of the transaction, and then, and they're outside of the top ten. Then suddenly they want to to Ray. Use The you know their fee as being a vendor to some ridiculous amount in I've seen that kind of thing before and. it, it can be somewhat. You know of a danger area for the buyer, and and then there has to be an entire other process. You know potentially to to re to mitigate that that issue, but the best way to protect yourself really is to get that the strongest for is possible so that you're not so. The REP is covering me beyond anything. That's necessarily the school's. That's interesting. I heard a very similar story in an interview. I did not long ago about some of the vendors switching terms right after the deal right and I think that that's probably a pretty common one associated with a big fortune, five hundred company acquiring a smaller business. Just because that vendor knows that big fortune, five hundred company has much deeper pockets than the small companies. That was their previous customer. Yeah, anything. You're Rossini's interesting surprises. come up maybe after the clothes. You know most of what I've seen post closed would be small claims that come up or something that was improperly disclosed in terms of surprises Sometimes you'll see something. more. You know someone in an ambiguous way that you know us. The buyer can can things that they. They didn't properly represent the day they proper. Who represented in so sometimes? There's that kind of ambiguous gray area where you know there's just a dispute between the buyer and the seller right, but it really just depends on the context of the situation. I mean from my standpoint and I haven't. I've only been working briefly five years now. I haven't seen anything major. Come Up, you know anything that hits the level of fraud, or or materially misrepresenting some item from the you know. Something matured misrepresenting something about the business, but. you know it's always. Always a risk. You'll have to let me know so I can come back and interview again. Yeah I would have yeah, that'd be great. Okay, so since you're on the buy side and obviously working a larger company. Give me, advice as somebody that's selling, accompany and give me some tips in terms of like how it can really protect myself, and what are some of the things to think about? Yeah, so? You're a small business in your cell looking to sell. You have to be aware that everything you're representing to the buyer the buyers GonNa take very sears in and in that context that means if your systems are not up to grade up to date you can't readily pull data to properly represent the business that's GonNa be a potential issue for you during the acquisition process. It's going to end causing more work for you on your end. and you're GONNA. have to potentially be exposed to more risk close closing, if something comes up and and again you have to be reminded as as a small business owner. Let's say that your business will now be part of bigger business. And this bigger business has actually much more notoriety than than Your Business and things that you were not a risk for yourself to be a risk for you in the context being owned by a much bigger organization, so really be prepared and have all your stuff in order so that the process can be comprehensive and things to get done the right way. Yes agreed and some people jokes that you know. You May WanNa just hire you know maybe a team or her at least a banker or whoever depending on the size of your business to really. Dig and do as much of do a lot of heavy lifting you. The business owner are not going to end up wanting to do yourself. That's right, but we're has to get done so if you do went hiring that. That you know, investment, Banker, or whoever other type advisor. and. You're obviously going to have to hire a lawyer, but you're gonNA also WanNa hire potentially other maybe accountants as well to really help you with all this entire process, and I think the way a small business owner can think about it is just a transaction cost you right? It's essentially a reduction in what purchase price is gonNA. Come to you right and there's obviously many different firms to choose from and the bigger ones. You know a lot of times in charge more than the smaller ones, but it's just something to be mindful of otherwise the process can drag on for a super long period of time. and you'll never actually. Get your money. Yeah, that's What's The craziest thing you've seen an MBA? I have seen. I think the craziest thing would be some of the emotions that come out during negotiation. Of when certain cuss words come out and people get very emotional about the process because. You, know! Maybe you're at a certain point in the deal. and negotiations, so there's really not turning back fan point, but you really don't want to sign up to those terms and so you know maybe emotions come out in an conventionally. You say something that you don't want to. During during the process and so I've seen that definitely from time to time and. I'm sure a somewhat common, but it's you know it can be very emotional event as as you. US SELLER WANNA. Make as much money as possible and. Retain as much price as you can, and then us and and avoid as much. You know painting on Tristesse possible. As well as the buyer's going to want to avoid taking on as much risk as possible, so it can be much more emotional potentially than I would ever expected before getting into. I've had a few times just in finance deals. Exactly I mean. You know whenever you have a lot of money involved in a lot of risk associated with completing the transaction and post closing risk. You know people get emotional. Believe it or not so. and again you know prior to getting into I would've thought everyone was basically happy with. There's someone's big, but I I've seen that that is not the case. I think people underestimate how taxing the actual cell processes. I think that's a big factor of it and Yeah I'm kind of curious like would What type of blow outs have you seen that people just getting upset and the thrown around or You seen anything beyond that? Into that, but then it's also you know people shouting potentially or or saying that you know this is not what we agreed to in a Bought the stage or or another part of the process were. That's A. Ridiculous request of us to disclose all bad. It's GonNa? Take way too much time, and Actually I bring that point up in, too, because emotions could just be around time and effort that needs to be put in properly disclosing. items right so. And then there could be emotions around that where that's going to take too much time or we need to focus on something else and so kind of all you know I've seen all the above and again from my standpoint. Oh, before getting into Emini I just would not a thought it. Would it would. Back together closing dinner. Yeah, generally they can in a part of our strategy, a lot of other tech industries Shaanxi I mean we are never focused on any form of costs, energy, or or removing headcount. Really we're. We're focused on or painting those. Employees, which many times includes a large section, a the capitalization, table, or especially the founder, so it's definitely a balancing act. Properly get them. Back you know we're we're you know you're going to now? Be Part One team and we know emotional before, but now we're part of one team, and we all have one goal, and if everyone's hitting that one goal and well multiple goals, but the one goal being you know hitting the business case, any of those restaurant issues are GonNa be. Mitigated really so. but yeah I it's it's a balancing act and you know sometimes we'll. We'll put together. Retention agreements with employees to try to protect around especially those employees for shareholders. Put. It is retention agreements. Try to incentivize them, but sometimes you can. You can only do so much from a retention standpoint, so it's a balancing act for sure you know Mo- moving from you know maybe the heated negotiations to. Post closing. We are now part of one team trying to strive for one business case, so at the end of is you got to embrace them as a family member, and all those emotions were all all part of it. Positive. Ben, thank you so much very time I really appreciate you taking the time to do a breakdown of the deal process with the myself our audience today. Thank deny I had a great job. Thank you for taking the time to explore the world of emanate with our podcast, please subscribed for more content conversations with industry leaders. He like our podcast. Support us by leaving a five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by my email. It's Qissan Kiss. Deal Room, dot net. Emanate Science is sponsored by deal room it project management solution for mergers and acquisitions. Additional educational content is available on deal rooms blog at deal room, dot net forward slash block. Thank you again for listening to emanate science see next time.
"It's merriam Websters word of the day for June fourth. Today's word is amalgamate spelled. A. M. A. L. G. A M, A, T amalgamate is a verb. That means to unite in, or as if in a mixture of elements, especially to merge into a single body. Here's the word used in a sentence from the Hamilton, spectator by Peter clutter balk when all the smaller municipalities and Hamilton Wentworth were amalgamated into the city of Hamilton in two thousand one there was resistance from the smaller suburban communities to the loss of their local governments. The noun amalgam derives by way of middle French from the medieval Latin word amalgams. It was first used in the fifteenth century with a meaning a mixture of mercury and another metal today, you're likely to encounter this sense in the field of dentistry amalgams can be used for filling holes in teeth use of a mile. Adam broadened over time to include any mixture of elements, and by the eighteenth, century. The word was also being applied figuratively as in an amalgam of citizens. The verb amalgamate has been in use since the latter half of the fifteen hundreds, it too can be used either technically implying the creation of an alloy of mercury or more generally for the formation of any compound or combined entity with your word of the day, I'm Peter Sokolow ski visit Marian Webster dot com today for definitions wordplay, and trending word look ups.
Over-Delivery - Ep. 28
"Yoyo Daily Fire Episode. Twenty eight if it's trash turn it off but if it has value please share it out for me. Of course it's brought to you by Max Effort Muscle Dot Com for all your supplement. Needs you gotta go to Max's effort muscle got to check out this coffee in the CBD. One thousand unbelievable and you're listening to the business and biceps network all right episode twenty-eight. I'm going to call it over delivery. I was thinking about something today and I was like. How can I talk about something that can help you? Guys really like make progress during this unfortunate time and I think the first thing that came to mind for me in my business was how with my skill set. Can I over deliver for the people that count on me right now like I was searching for because one I was pissed off? I couldn't go to the gym for twenty years. I've owned. Y'All and I couldn't go there so I was just like you know. Kinda twisted up about that and then I didn't have my normal kind of thing on just like everyone else but I thought to myself. Gee How can you over deliver for the people that count on you? What does that mean? 'cause that the first thing when there's adversity going on and motherfuckers can count on you. They always show love so no matter what business you're in think about whether it's still a corporate structure whether it's your own business doesn't matter how can you over deliver right now in. This is the way that I tried to one. I was being real honest with the first week of content. I'm always honest but like how I was using this upbeat guy. You're seeing today. Optimistic is a motherfucker. Like you can't touch me that week you could touch me and I was honest about it because I was like man. I'm trying to fucking figure this out just like everyone else. But I'm still the most optimistic dude you might run into but that week I was like this is how I have to deliver. Because his how everyone's feeling be real honest in an open about it and I'm always that way but that week I was like well do I do. I just try to be the fucking motivational dude or do. I just really do what everyone's feeling like. And that's what I did and then on top of that. How can I release more programs to meet the need because everyone not everyone but a lot of people look forward to going to the gym and working some people don't it's a chore for Them? But most that rock with me do and I thought to myself right now. They're dreading it because they got a fucking ten or five pound dumbbell laying around or they. I've seen so many people. It's unbelievable that only have one dumbbell like it's it's unbelievable but they didn't have enough going on in not creative enough because it's not. That's not what they do. It's what I do. So how can I create? Suffer bans only for body weight only for doubles. I want people to to get up in. Have maybe even more excitement than they did before in no that I had their back right. Max. Upper muscle still boom boom boom. We're on top of customer service. We're trying to. We got a bunch of product gone out. We're trying to get a bunch of back in we're always trying to produce content. I was making dumbbells. Out of fucking gallon. Jugs doesn't doing crazy thing John's putting his workouts up everybody's trying to get through this. So how'd you overdeliver for what you do right now? You have to think about it because you want to be the person that comes out of this. If you were like damn that dude had me they got me and I do. I got you up telling you like I've went live multiple times more content. I'm doubling down on. What I believe is needed right now in the skill set that I possess I wanna be that guy and I'm trying to show you guys that look I want. You still look forward to working out. I want you to think for one second. Wait a second did I maybe get better results in the quarantine than I did. Outside in my. Maybe a little bit more disciplined than I was before because now I had time to think about it and I'm fucking crazy dude or because of the stuff from business biceps and here on the daily fires. Did I get a chance to really dive in on the business? I WANNA start. Could I over deliver for myself and get up a little earlier in push for my dreams? That's what I'm saying. Think about over fucking delivery. That is what's needed right now. I'm telling you when I tell you I am trying my best. That is what I get up with. The intention of every day is the overdeliver to make sure that you guys have what you need for your business motivation for your fitness motivation. That's what I'm here to do. I know that's my spot. I know that's what I was put here to do. It's my passion. I can't fucking hide it if I tried. It's just what it is so there's gotta be a way that then you guys can use that version of what that means for you. Whatever job you're in whatever you're pushing the do take what I just puked out everywhere and say I'm GonNa take a little bit from G. M. A. Put it right here. I'm overdeliver and a make make should happen. I'm going to be the person that when we all think about this. They're like I could rely on that motherfucker episode twenty eight daily fire if it's trash turned it off but if it has value please share it out for me brought to you by Max Effort Muscle Dot Com and you're listening to the business biceps network thank you.
Over to you...
"And. Hello, and welcome to another episode of the Magan show. It is the penultimate episode in a pod day in may, I have put caused it every day for the entire month of matey thousand nineteen bull. And so, before tomorrow's episode if you're listening to this time before, tomorrow's episode, I wanted to really had to you. I want to say before tomorrow's announcements with some exciting what I hope you think are exciting developments, I wanted to talk to you about what you've enjoyed over the last month because we've really covered new territory. We've gone over some of the things that we've discussed time and time again that I know really resonate. We've covered food. We've got health recovered depression. We've cuttings IT, we've covered skin-care beauty fitness. We've covered a lot. And so what I would really like is to hear from you. Let me know what you would like to hear more of, we've had a canape of topics every single day and had a nice little taste. But if there's anything you want me to take into look deeper. Maybe we didn't cover it during the thirty days may thirty one days. Maybe we didn't even cover it during a day, but you'd still like me to explore future. Episode Email me on the beauty podcast at g mail dot com or please do you get in touch with me? I know a lot of you have been in. Which over the last few weeks on social media, you can diem me on Instagram unto where I am at Emma gun. That's at E M M A, G, U S, or you can join the closed Facebook group linked, join us in the show notes, you do have to want to those two you questions or I'm afraid you to get in, and you can ask either via DM in that group or you can ask the group is a hold, and see what other listeners thinking. What's most important for me having done a day in may? We do have one more episode left after this. What's most important for me is to make sure that we are discussing in this episode with in, in this episode in this podcast with the right experts, the kind of things that will be useful to you the kind of things add value to what you're all ready doing or the things that may be spark a conversation that you didn't know you wanted to have, or even if it's topics that, you know, nothing about that you would like explored. It's just really a collaborative effort as far as I'm concerned, and I do my best to get the right kind of guess. On the Polk cost and to share as much as possible to add value. But the way that I can do that better is, if you get in touch with me, so please don't be shy use that Email address, the BT podcast at Jima dot com. Or do send me a message on social media. Why am at Emma guns? Oregon, that close Facebook group and the other thing, I think I'm being too forward by asking if you have been enjoying port day, may need to the show. If you all I'm so glad that you found the podcast it really is. It's like to have you here. If you have been enjoying port a day, like the daily podcast and you have the capability via wherever it is that you listen, I'd be so pleased. And so delighted if you wouldn't mind leaving a five star review, it's a way of helping a show like mine, which is self published and self funded standout on massive massive podcast platforms, because there are sea of podcasts out there and hopefully what we're doing here together is something that we can get to even more is on the way to do that. One of the ways to do that is. Is more of us five star reviews. So I hate me asking. But yes, if you are able view are streaming and downloading this episode if there is a function to you that, that would be incredibly calling to be. So that's really what I wanted to say, I really am a look now looking forward to all the masters. I'm going to get from everybody. Thank you so much. This is not over. We still have another show a day, so please do tune into that. And find out what's in store wants maze over. I'll see you on the next one.
"It's Marian listers word of the day for June fifth. Today's word is Malapert spelled. M. A. L. A P, RT Malapert is an adjective, that means impudently bold saucy. Here's the word used in a sentence from the man upstairs and other stories by PG Woodhouse, fair ladies brave knights Charles VAR, le'ts, Squires, scurvy, knaves, men at arms, Malapert rogues, all were merry the word Malapert debuted in English in the fifteenth century was a favourite of Shakespeare, and is still used sporadically today, the prefix Mel, and they L, meaning bad or badly, and deriving from the Latin word mallows is found in many English words, including malevolent, and malefactor, the second half of Malapert comes from the middle English, a pert, meaning open or Frank a pert for. Further derives from the Latin word appear to meaning open, which gave us our noun aperture meaning and opening putting the two halves together, gives us a word that describes someone or something that is open or honest, in a bad way. That is in a way that is rudely bold, the noun Malapert also exists and means a bold or impudent person with your word of the day, I'm Peter Sokolow sqi, visit Mary, Webster dot com today for definitions wordplay and trending word look ups.
Birds + Communication
"Townies towns citing news to I love about town with some special benefits to not only will be releasing the best part is you'll have that sweet sweet satisfaction knowing you're supporting our show Malayia APP that's h. m. a. l. a. y. in search for dumb go to Himalayas search that Himalayas APP download it it's free listening all your podcast his widow Paul bid up to the next level version of standup science can be mixing researchers and with the Multidisciplinary Association of Psychedelic Studies and dance safe more where are we here why are we here not entirely clear visit everybody with a everything is smooth sailing so let's see now I'm committed I'm talking with associate objects here at the University of Tennessee Todd Freberg is joining grateful for this opportunity to talk to you thanks show the other night was fantastic thanks I does it usually venues do all the ticketing and I had to do the ticketing to get people in it was a whole thing and so that was that was one of the most flustered the balcony where apparently there were some some scofflaws that hey awful stage but yep probably not going back there so long story short story yeah when I said brief little kid and got interested in and what communication it's started studying birds mainly because as an undergraduate the everyone's Russian into will's oil song field is that what's going on yeah but he hundreds and hundreds of universities around the world where Birdsong and bird calls big outside of research are you would you say like your bird watcher a if on a big year I been here eighteen years now I think I can everything else is it's anybody's guess I'm not murder I'm not a bird or at in his fascinating to me that the the the big year where people but as it is the movie that what Jack Black Steve Martin were in do you remember this movie us to what the reality is so you're literally you're flying from one site to another you schedule okay well I don't get it but what is what is bird communication one oh one how how do you how do you start allman like what kinds of mechanisms are important for that sings a song does it get immediate behavioral feedback from another bird instinctive it's sort of built into the species from the onset and so experience really isn't important brood parasites I don't know if you've come across the sow I love a good Brood David attenborough fans and and you know that they've they've been are there they're called obligate brood parasitic because sees and so this species was sort of built up shouldn't learn it song maybe natural selection should have shaped it to have this sort of instinctive song the species it's basically meant to kind of sort of blend in with the other spring of of the the mother there and then times bigger than themselves yeah exactly so it's not like the Kuku muscling and an egg outer some another nestling outta reason there's a lot of species that don't reject them but just raise them as if they words naturally singing songs of other species so it must be instinctive right and that it they learn their songs just like any other species we found that dissertation looked at how not just song but mating preferences APPs somewhere in the exact rap music this was a there was a South Dakota Hannah are you able to decode yeah I I put two different I put I'm not bragging but yeah I used to be able to yeah some subtle tasting ones lost so so then Karol on the behavior that you produce and if you think about that in our species that's not influenced by others speaking but for everybody yeah diversity of members a group that an individual is in how does that affect experiments and we have these really large cages out Pacific region that that uses kind of mostly the same kind of just some of the birds are just better at making the the kind but like why why some songs are copied and some aren't named after this and tit mice and it's got a really complicated Ace but like why individuals learn this song versus this song why they so how much do these different cultures find yourself in this other region trying to pick up a female with a different the things that are regulated by song as mating behavior and speech Asian regulated by sometimes it breaks down and you have hybrid sort of interbreeding between members so it would be sort of unlikely for a like an East Tennessee bird to all of sudden pick Albert those kinds of species that migrate the starting to be a little bit of information about lots of different populations and so what kinds of things are going on down there they over winter in some species it seems like they do sort of hang around and groups knew more about birds in could identify the species but I I remember air that I would recognize and then when when there is like a migration pattern hey what's going on here but the birds that were migrating just seemed like they territoriality can break down a lot once you get out of the breeding season back and the overwintering period so what's humane projects going on in the field one is one is in these aviaries these large the study I did earlier where I found that in field populations we're in larger flocks produced calls that were more complicated it's a more complex appear mentally where we set up small medium and large sized flocks what she's doing is is a partial replication of that but doc but put in a smaller space where individuals presumably have to interact with one another a lot more it's all part of this idea called the social complexity hypothesis for communication say more things communicate more messages and so needed more complicated communication man 'cause I always I need to know a bunch of big words to communicate to myself alone in terms of territories at how does it work as like a a groups how how is that used territorial yes oh cert- early took court and ultimately copulate with females and a lot of species that function I don't know if you know Steve No wicky at Duke University his lab as you play back this arm and another male's territory and then see how that male response you see and D. or in the territories around him that caught melee and they're playing it should keep them out for quite a while and that's what they found is that if they if they so that's the function I imagine the the mating song ABC's but This is where I'm showing my non burder flag Edita that males in this group have uh-huh in the typical repertoire I could be wrong but I think that that would be the that would be the perfect thing apt because now you've got it all wrong that won't be I if we can do a a sidetrack and we had these long philosophical conversations with one another the other deejays I mean that's I know that's not true for you just the way go go back and forth I do need to be mindful that like Oh someone listening May to make for for a to to hold the conversation when August either circumstance that would make sense is it something author telling potential rival males something about about fitness less intricate are or louder whatever yeah yeah this is a species it's actually the State Bird Tennessee but it's a species that mimics and rick how're wait that's the that's the mimicking yeah species that does a perfect representation of other species to right yeah see you in a liar birds if you've seen maybe Roe special yeah Mockingbird you're not that good okay no disrespect to people that study mocking birds ah the big here now you're screwing up all their details of their favorite species Yeah so this this was a study back in the seventies that found that males with larger are more complicated song repertoire is related to help their condition fitness has technology influenced modern studied genomes and do DNA tests and I imagine maybe even tracking rose was not it was not a researcher of birds. He was primatology ray carpenter pounds of recording equipment and these massive parabolas that you'd have to insert of Riggan bordering on impossible I would think and since then you'd go from site to site pretty easily the equipment that you have here was his last you're listening to this you know that's not much bigger than an iphone the memory on SSD cards or micro SD cards is just we can do this in larger mammals pretty regularly but and be like a week or two interesting and you just put a little harness or somehow I think the has the birds where they get he's loved this Blue Band and and yet you put an orange band on another guy's Zik industry and maybe out with yeah That I use I guess this is a little bit of overkill this is probably a hair really doing something and then you get all the the hand noise on the Mike which we are kind of role in our modern environment that human influence with you the new modern science I imagine it creates all sorts of issues for most any other species and a lot of birds have the sounds they produce down at frequencies the common ones is that birds that have relatively all of higher pitched sounds so that there are sort of rising out of the background or call later traffic noise dies down or something like that and you're having to stream all the time yeah but you WanNa be cool yeah we get over the noise I think there's some evidence on animals I think so another thing that might be another that's but I'm not sure I bet you're right graduate student of Mine Jessica Owens did a study in these aviaries I mentioned before where changed their calls or their rates of calling they just move closer together so human traffic noise problem so at least so the European starling because but what's what's wrong with this so starlings are everywhere and they do really well in urban areas and maybe there is an association with I little mad later on in life and developed some interesting you when you go out and you're doing research are there like individuals I'm just I only came here today to remind you of all of the skills and one of our captive studies so she was color marked we knew who she was we could identify her in the field live call I think it's probably because she had some may be natural damage to the C. rinks annoy sound production organ way ours is ours is one reduce sound on those two sides and sometimes they like in northern kinds of sounds could you or as a species out there that that can do in display one side for the females than the other side is like camouflage or whatever relevant to either females or males and the other side produces the higher frequency that's squeaky call I don't know how to describe it and I certainly can't imitate it but you the the mortality rate is about fifty percent every year for small songbirds like on of this species so yeah if a bird makes it through one full breeding in an lies Oracle think so with his voice yeah so she really so you know primatology who who you know sometimes farm birds have imagined birds have have varying quite a there's it's it's called the shy bold shy bold continuum wear us whereas other birds of the same species could even be the same population even that's weird that they call the shy bold strategy hall for like contests situations whereas this is just like how do you approach meanings a little bit so all is well and everything makes again and then there are birds that call all the time and others that you have to record for a very long period of time usual level variation like that that seems to be pretty repeatable so the birds that you or has it has there been any kind of human influence impacts of undoable here yeah so we one of the reasons I studied chickens intent mice is they something easily I'll go that route and yeah efficient that's so they they're found in pretty popular smoky mountains or the Cumberland Mountains and so that's one reason I as far as I know they've been here as long as we've had documentation finally I don't know what they have in terms of and check the chicken it's sort of a creation Taylor or sort of a is which suggests it's been around for a very very long time in that location what is your the most fascinating bird out there to up into the United States in the Cherkaoui mountains in southeastern they form really big flocks which for this theory when you start a project out there it's just it's the other side of the country and I've I get to go anywhere I want to I'm going to put it on the list if you go I always go in the winter I'm usually the only person staying at the southwest ring through the late summer months so I can send you a link all right yeah I do I really want to get in there and dissect ah I did a little bit it seems a little it's like when people take a vacation and they need to check off all experiencing it and and gross being becoming girls they're just checking off anything or we've really given burners hard time today this is fun I've edged I'm looking forward to the next science meeting where I'm going to be confronted about I I have my my guest mentioned
#A133 (alluvial to almandite)
"Hello word nerds. Welcome to another episode of the dictionary yet. We're still doing this real quick. Today is June twenty first, but when I'm recording this, it's not June twenty-first. But when you're listening to this, no, that's probably not right either. When this posts it will be June twenty-first, and that is the summer solstice of twenty nineteen. I love this day because it is the longest day of the year it has the most sunlight, and I think we could all use some more sunlight now in again. So go ahead, take advantage of the longest day of the year. If you're in the northern hemisphere, if you're in the southern hemisphere, it's probably your shortest day of the year and apologies for that. But in six months, it will be flip-flopped, and you can be very happy for your longest day of the year, and we will be in the cold and the dark. And that is really depressing. To me that time of year. All right. First word for this episode is. Alluvial. A. L. L. U. V. I A L. This is the first form. It's an adjective from seventeen eighty one relating to composed of or found in alluvia m-, as in alluvial soil or alluvial diamonds, next. We have the second form of alluvial. This is a noun from eighteen sixteen and alluvial deposit. Next is alluvial fan. F A N. This is to separate words. This is a noun from eighteen sixty two the alluvial deposit of a stream where it issues from a gorge upon a plane or of a tributary stream at its junction with the main stream, and we actually have a little black and white drawing of an alluvial fan. It just looks like some hills with a river in the middle. And then at the end of the river, sort of. Fans out, which is where they get the word fan from next is alluvial on. A. L. L. U. V. I. O N. This is a noun from fifteen thirty six one the wash or flow of water against ashore to we have these synonyms flood and inundation three the synonym alluvia m-, which we will be reading shortly four and a session to land by the gradual edition of matter as by deposit of alluvia m- that then belongs to the owner of the land to which it has added. Also the land so added. The says this is from the Latin aware a which means to flow past or deposit of water. And that is from LA Veira, or LA the vs might be w so it might be law wear a which means to wash and there's more at the word lie. L Y E, every time I hear the word lie. I think of the movie. Fight club. And next is alluvia. M-. A. L. L. U. V. I U M. This is a noun from circa sixteen fifty six clay silt sand gravel or similar Detroit o material deposited by running water next is all wheel drive all wheel is hyphenated. This is a noun from nineteen thirty four and automobile drive mechanism that acts on all four wheels of the vehicle next. We have the word ally. Or also ally, both pronunciations are correct. This is the first form of it. It's spelled. A. L L Y. This is a verb from the fourteenth century transitive definition is to unite or form a connection or relation between synonym is associate as in allied himself with a wealthy family by marriage in-transit definition is. To form or enter into an alliance as in two factions allying with each other. The etymology says this is from the Latin Ali Garay, which means to bind to that is from league ouray, which means to bind, and there's more at the word ligature. Now, we have the second form of ally or ally. This is a noun from fifteen ninety eight one a sovereign or state associated with another by treaty or league to a plant or animal linked to another by genetic or tech sonic proximity. Three one that is associated with another as a helper. Synonym is exhilarating. Now we have ally again, but this is a suffix. So it is dash. A. L. L Y, it says it's actually an adverb suffix so before the main definition, it has just a dash L Y as in terrifically. And then in that in the word. Terrifically A, L L Y is a cts to show that, that's the part that we're talking about. And then the main definition is in adverbs formed from adjectives in I see with no alternative form in icy a L. So it's talking about adjectives that end in icy, or I see a l so, for instance, in their example, terrific or terrific Li it ends in ic-, which is where A L L Y gets added to the word terrific. But if you were to have a word like radical, that's the just the first one that I can think of that ended in icy AL venue, just add L Y to turn it into an adverb. I think I figured it out next is I think it's pronounced. Alal-. A L, L, Y L. This is an adjective from eighteen fifty four being or containing the unsaturated monovalent radical. C h two c h c h to a lot of C H is, and it looks like the analogy is telling me that it is from the Latin word Allie, m which means garlic, and we've talked about that before next is the word a lillick a fun. Word to say L, L, Y L. I see this is an adjective from eighteen fifty six involving or characteristic of an ally ill radical. So, of course, L is the word that we just read. And that's funny. That radical is mentioned because I completely made that one up when we were looking at that adverb suffix next is the word alma. Jest. A. L. M. A. G. E. S T. This is a noun from the fourteenth century, any of several early medieval treatises on a branch of knowledge. The etymology is saying, this is from the aerobic all Modu STI the Arabic version of Ptolemies astronomy. Treaties treatise. And that is from, I'll plus the Greek Majestee, which literally means the greatest, as in composition. I guess, so that's what alma just means. Next is almo mater, two words, a l m a next word. M. A. T E R. This is a noun from sixteen fifty one one, a school college or university, which one has attended or from which one has graduated to the song, or hymn of a school college or university, the etymology, I think is kind of interesting, it's Latin, if you didn't already know that, and it means fostering, mother. So I think what it's saying is that the, the school or college or university that you graduated from is kind of law, like kind of like the mother, and it has fostered you it has given you education so you can go out. Into the world. That's kind of nice next. We have almanac. This is a noun from the fourteenth century one eight publication containing astronomical. And meteorological data for a given year, an often, including a miscellany of other information, I had trouble with the word meteorological, seemed like I was adding an extra syllable. But I think it's right to a usually annual publication containing statistical tabular and general information next. We have all. Mundine. A. L. M. A N D I N E this is a noun from the fifteenth century. We just have these synonym almond date, which is our next word. But let's take a look at the etymology first pairing this down. It looks like it's from the middle Latin Alabama Dina, and that is from Alabama, which is an ancient. City in Asia, Minor. And now we have the word Allman dight, and I think this will actually be the last word for this episode. A. L M, A, N D. I thi this is a noun from circa, eighteen sixty eight a deep red garnet consisting of an iron aluminum silicate, and that will be the end of this episode. Thank you so much for listening. And until next time this is Spencer reading the dictionary. Thank you. And goodbye.
#B149 (birl to birthright)
"Hello words welcome to this today's episode of the podcast called the dictionary. We are at the top of page one twenty six. You, hopefully are all doing well. It's very weird at the time of recording it seems like cities and states are starting to loosen their restrictions a bit now that we've been. Sheltering in place for so long they have some. Theoretically a little bit more room in the hospitals, so you know it's not like this virus is going away, but you know things have maybe slowed down enough where they are starting to things open things up so I drove past a restaurant that. Starting today in my town, restaurants that have outdoor seating people can sit outside and eat, and it's very strange and I feel like people were still sitting too close together, and of course they didn't have masks on because they were eating I don't know if I would feel comfortable doing that right now. But that is the state of the world. So you know probably so this is the end of May that I'm recording this so I think probably in lots of other places end of May beginning of June, things are starting to evolve. And you know today's episode is in the middle of June so. Things could be totally different by now. by Ben by now, anyway, the first word is will be. It is the second form verb from seventeen twenty four. transitive is I number one synonym is spin. We number two to cause a floating log to rotate by treading, so it just says to claw to cause to rotate by treading, and that could be talking about a floating log, and of course in my mind I think of cartoon characters, running on a log in a lake or a river or something and You know people do that in real life. Though aren't there like lumberjack competitions where they do that. Now we have the in transitive definition. It says to progress by quarreling Berleur is a noun. Now we have Berman I think that's how it's pronounced capital B. I.. R. M. A. N. Noun for nineteen seventy-three, a long haired, domestic cat of a breed originating in Burma, which in parentheses it says Myanmar and resembling the Siamese in eye, color and coat pattern, but much stockier in build with pause symmetrically marked with white. Says it's a variation of Berman. B. U. R. M. A. N. I just saw a picture today of a spinks cat, so a completely hairless cat with its paws out, pause outstretched towards the camera And the fingers. Would, they be called fingers? Digits spread apart and because it has no fern O'hare. You could see that they actually have webbed webbed fingers. There's a webbing in between their fingers. I wonder what the reason for that is but it was just such a weird view of a hairless cat. It was super fascinating. Moving on to buy row capital, B. R.. Oh, this is a trademark and it is used for a ballpoint pen. I feel like if I were a bit older I would know this by Ro. I'm sure I've seen it. Sort of reminds me a little bit. There's something in my brain that that sparks but I would not have known that Bairo was a ballpoint pen. Now. We have Bir- couple ways to pronounce it B. I are Noun from Circa Nineteen, seventy eight, and it just says hey. Go see the money table because it's some sort of money, but the etymology says it is I'm Harrick. AM H. A. R.? I C. Burr B. E. R., except the E is upside down, and it literally means silver, in I'm hurric-. So we are going to move onto bursts B. I. R. S. E. Noun. From, where is it before the twelfth century number one is chiefly Scottish so as number two number one says a bristle or Tuft of bristles number. Two Synonym is anger bursts. This is from middle English burst from old English. Burst B. Y. R., S. T. and there's more at the word, bristle. Next and a bunch of these words are going to be Let's see wow I think all plus a few. In the next episode we'll start with the word birth bi RT h This is the first form. Noun from the thirteenth century, one a the emergence of a new individual from the body of its parent. What a wonderfully! Concise and specific definition, the emergence of a new individual from the body of its parent one be the act or process of bringing forth young from the womb. Number to a state resulting from being born especially at a particular time or place as in a southerner southerner by birth. Three a synonyms are lineage and extraction. Two words that seemed different to me. Now we have three be high or noble birth number four a is archaic, one that is born for be synonyms are beginning and start. Let's see Emoji now. Okay? No, we have the second form of birth. It is a verb from eighteen, fifty five, starting with transitive number, one is chiefly a dialect to bring forth to a to give rise to synonym is originate. To beat to give birth to. Now, we have the in transitive. There's just one to bring forth or be brought forth as a child or young like you have been berthed. Now we have the third form of birth. It is an adjective from nineteen, seventy five, and we have the number three definition for the word biological as in his birth mother. Next is birth canal, two words Noun from nineteen, twenty seven. I feel like. Maybe I should have had a guest on who has given birth, but because I can't really speak so good to that anyway. The birth canal the channel formed by the cervix, Vagina and Vulva, through which the fetus passes through a passes during birth. It is the canal at which someone is berthed. Next is birth certificate Noun from eighteen sixty, a copy of an official record of a person's date and place of birth and parentage. Next is birth control now known from Nineteen Fourteen won control of the number of children born especially by preventing or lessening the frequency of conception synonym is contraception. Number, two contraceptive devices or reparations? Obviously, there's a whole bunch of options for those. But. Now we have birth control pill that is one of the birth control, contraceptive devices or preparations. Down from nineteen, sixty six any, ooh, this is a long definition any of various preparations that usually contain both a progestin. As, Nora thin drone think I said that right norethindrone and an estrogen as Ethin- nil. F- traditional Estra dial are taken orally especially on a daily basis and act as contraceptives, typically preventing ovulation by suppressing secretion of Oh. Here's a fun word Ghana dot pins. Go NADEAU TROPE INS. As lieutenant hormone as Luton, hormone is an example of a gonNa Donald trump pen. And then it says called also oral contraceptive that is another name for birth control. Pill. Next is birthday. One Word Noun from the fourteenth century said it's so weirdly because there's a dot to designate the first syllable and the second syllable, and so it almost looked like two words, but it's just your birthday. Now from fourteen, the fourteenth century I think said that already won a the day of a person's birth. One be a day of origin. Number two an anniversary of birth as in her twenty first birthday is today. Day It would be great if this had landed on my birthday, but it's not not. No, it's not. So, if today's your birthday happy birthday. June sixteenth person. Next is. Birthday suit two words noun from seventeen, fifty, three unclothed skin synonym is nakedness. You're born in your birthday suit. That is what you were wearing the day that you are born which is your birthday born from the birth canal? You have been berthed. Next is birth defect Noun from nineteen. seventy-one, a physical or biochemical defect that is present at birth, and may be inherited or environmentally induced. I don't know if I have any birth defects other than. Probably my brain next is birthing room two words Noun from Nineteen, seventy, eight, a comfortably furnished. I don't know if they should use comfortably because depending on where somebody is. Giving birth, it might not be very comfortable room, but it says a comfortably furnished hospital room where both labor and delivery take place, and in which the baby usually remains during the hospital stay. Next is birth. This is a noun from fifteen. An unusual mark or blemish on the skin at birth synonym is Nevis and ev us. I wonder if does everybody have a birthmark Or, not I don't know Some people have large birthmark. Some people maybe have no birthmarks. I know somebody who had a child, and they were born with many many birthmarks around over their body, and unfortunately the the skin I? Think is very fragile. And, so they had to have a lot of surgeries to get rid of as many of the birthmarks as they could, and I think they did a really good job, and I remember when this happened. They use the word Nevis, or there are other words related to Nevis You know there was probably some scientific terminology for the condition. but that's where I learned Nevis so I I was like Oh i. actually know that word and then you know sometimes there are people who have birth marks that they're kind of embarrassed about I grew up with a kid who had a large birthmark over his his. And I think that he got teased a lot. Of Friends with him I I, don't think I teased him. Ever but I felt really bad for him that he had to go through that for something that of course was no fault of his own. I mean that's usually what kids are teasing other kids about things that the kid couldn't have controlled anyway. So yeah, that was that was unfortunate and that happens a lot. So. If you're listening to this, don't tease the kid for their birth mark or really anything for that matter. Next. Is Birth paying P. A. N. G.? Two words Noun from seventeen, twenty one one. Wow I'm I'm about to say one three times in a row. One of the regularly recurrent pains that are characteristic of childbirth, usually used in plural number two is also plural, disorder and distress incident especially to a major social change. Now. We have birthplace one word from sixteen o seven place of birth or origin. Next is birth rate one word Noun from eight fifty nine, the ratio between births and individuals as a specified population and time. And our last word for this episode is birthright, one Word Noun from fifteen thirty, a right, privilege or possession to which a person is entitled by birth. What is going to be the word of the episode? Well I think I'm going to pick birth control because. This is the thing that a lot of people don't do, and it has caused there to be way too many people. Then this earth can handle and you know there. Unfortunately, there are a lot of schools and people who don't teach about this and so it has caused a lot of problems. That is my thought about this. My opinion It's not complete opinion. It's partially fact as well so you know, let's teach about birth control because you know people are GonNa do it anyway, so you might as well not have more babies than there should be. You think okay I on that note. This has been spencer dispensing. Information Goodbye.
Exciting Announcements: Become a Womanniac!
"Hi It's Jammie. I'm here on a Sunday to tell you about several pieces of exciting news for Encyclopaedia Will Manica first and foremost we've been nominated for a webby. It would mean so much to us if you could vote all you have to do. Click on the link in our show notes. Secondly we're launching two new initiatives that we've been cooking up or some time which offer ways to deepen our relationship with all of you with Mother's Day just a week away. We want to help you tell the mother figure in your life how much she means to you in a unique way for go the classic gift and purchase a customized episode of Encyclopedia with Monica starring. Mom HEAD TO WONDER MEDIA NETWORK DOT COM and simply fill out a few questions for one hundred dollars will make a special podcast episode. All about your mom. That will no doubt be a big hit. This mother's Day hurry. Submissions are due. Wednesday may sixth and we'll be delivered on Mother's Day may tend. I'm also so excited to share that. We're launching an encyclopedia will come membership program become a maniac and you'll get to join other members of the community each week for special live events with me my sister and Co Creator Liz and the rest of the team behind the show by becoming a maniac. You'll also get the chance to contribute to monthly theme ideas and even help us select which women we should feature in future months. We're kicking things off with our very first live event. Next week I'll be hosting Acuna to answer all of your burning questions about what goes on behind the scenes and what's coming next to join and become a maniac go to glow dot FM slash Romantika. That's G. L. O. W. Dot F. M. Slash Manica W. O. M. A. N. N. I see a times are tough right now so we really appreciate any support you can give us. We want to continue to bring encyclopedia. Manica content to you every day. Thank you so much for listening and for being part of this community talk to you tomorrow.
#B166 (blancmange to blanket)
"Hello to everybody who is listening to this? I am affectionately calling you word nerds. Thank you for joining me If you're not a word, maybe you're becoming a word today is. July third. It's a Friday I think because. I have the day off from work and I hope that you all have the day off as well, I. Don't know what's happening. Are there going to be parades today or tomorrow? for the fourth of July for Independence Day here in America no clue I think ours might be canceled. because. There's still a virus out there. Okay. The first word is I. Hope I pronounce this correctly. BLANCMANGE, B. L.. A., N. C. M. A. N., G. E.. It is a noun from seventeen, seventeen, a usually sweetened and flavored dessert made from gelatinous or starchy ingredients and. Well if somebody could make me a Vegan version of this I would like to try it because I. Don't know what it is, and I like things that are sweet. This is from Middle English blunk. From anglo-french bloc, Maggia literally means white food. Okay, that's a really creative name. Next we have bland adjective from fifteen, sixty, five, one, a smooth and soothing in or quality as in a bland smile, one be exhibiting no personal concern or embarrassment synonym unperturbed as in a bland confession of guilt. To a not irritating stimulating or invigorating synonym is soothing. I don't usually think of bland is soothing. To be synonyms are dull and. Did as in bland stories with little plot or action. Yep, that sounds like what I think of when I think of bland, which also sounds like a synonym is the word swamp, which also does not make sense in my brain bland Lee is an adverb and blandness is a noun. One could argue that this podcast is extremely bland. If you would like to put that in a review, I would be totally fine with that, because it's true, but also give me five stars, please and thank you moving on to bland dish verb from the Fourteenth Century transitive is I to coax with flattery. Synonym is Cajole, and then in transitive to act or speak in a flattering or coaxing manner. And then a synonym, the word cajole again. Bowland ISSUR is a noun. BLANDISHMENT is next. It is a noun from Circa fifteen fifty three something that tends to coax or cajole synonym is allurement. It is often used in plural. Next is blank. The first form adjective from the Fourteenth Century Number One is archaic synonym is colorless. It's blank. Number two, a appearing or causing to appear dazed, confounded or nonplussed as in stared in blank dismay. To Be Synonym is expressionless as in a blink stare. Think. We've all had that when we're daydreaming. Are Thinking about something. We just have a blank stare on her face. now we have three a devoid of covering or content, especially free from writing or marks as in blank paper. Three beat having spaces to be filled in. Three C. lacking interest, variety or change as in blank hours number, four synonyms are absolute and unqualified as in a blink refusal number, five synonym is unfinished, especially, having a plane or unbroken surface wherein opening is usual as in a link key also is in a blank arch. We have a synonym at the end it is the empty blankley is an adverb and blink. This is a noun. This is from anglo-french blunk, which means colorless or white. It is of Germanic origin, akin to the old high German. `Blanche, which means White, probably akin to the Latin Flood Guerrara, which means to burn, not sure how that's related and there's more at the word black. It's funny, though because black and blank or obviously spelled similarly, but `blanche are these these older words actually have the word white in them, white or colorless So. Yeah, that's just an interesting way that that happened. All right now we have. The second form of blank. It is a noun from circa. Fifteen seventy one is obsolete, the Bullseye of a target to a an empty space as on paper. To be a paper with basis for the entry of data as in an order blink an order blink, okay, three a piece of material prepared to be made into something as a key by a further operation. I've actually made keys using blank keys. I worked at a big store in the electronics department, but sometimes they needed help in like the sort of home area and I learned how to make keys only did it a few times, but that was. That was kind of a cool experience. The a cartridge loaded with propellant NA seal. Tile for a an empty or featureless place. As in my mind was a blank. For be a vacant or uneventful period as in a long blink in history. Five a DASH substituting four and Word! okay moving onto the third form of blank. It is a verb from seventeen sixty four. transitive is I won a synonyms are obscure and obliterate as in blinked out a line. One B to stop access to synonym is seal as in blank off a tunnel. Number two to keep an opponent from scoring as in were blanked for eight innings such a weird use of this word. Now? We have the in transitive definitions number. One synonym is fade, usually used with the word out as in the music blanked out. Number two to become confused or abstracted, often used with the word out as in his mind blanked out momentarily. Next is blank check two words noun from seventeen, ninety, three, one, a signed check with the amount unspecified. Everybody would like a blank cheque, right? Number two complete freedom or action or control. synonym is carte blanche, C., A., R. T. B. L. A., and C. H. E.. And then our last word for this episode is blanket I am sitting on a blanket right now. Actually This is the first form. The second form will be in the next episode along with the third form. Okay blanket is. From the fourteenth century, one a large usually oblong. Woven fabric used as a bed covering. One be a similar piece of fabric used as a body covering as for an animal. As in a horse blanket number to something that resembles a blanket as in a blanket of fog also was in a blanket of gloom. Number, three, a rubber or plastic sheets on the cylinder in an offset press that transfers the image to the surface. Being printed blanket lake is an adjective. This is from Middle English. It means white woolen, cloth or bed, covering from anglo-french blanket which is from belong which means White, and there's more at the word blank. So those were all the words I will pick. One of them I will pick bland as the word of the episode, because this podcast is bland, I will stand by that. what was I going to say about something Oh. I'm I'm not done yet, but I have well by the time A-. This episode comes out. Maybe I will be done. I have slowly started to put these episodes on Youtube, I'm collecting them in batches of ten so episodes one through ten episodes eleven through twenty are all in one video There's there's no video component other than just the logo. So you know if you would rather listening to the listen to these on Youtube, which some people like podcasts on Youtube. You feel free to go ahead and do that. But or you could just keep on listening where you're listening now. That's all I got to say. This has been spencer dispensing information. Goodbye
96. Transforming M&A to Improve Integration
"Hello emanate friend science academy coming up this march twenty fifth. We're excited to have speakers lined up from google atlassian intercontinental exchange and more are instructors will be sharing lessons and techniques that you can apply to optimize your practice. This is free. For emanate science academy members if you're not a member yet an as science dot com and get sign up today i'm ki sam patel and you're listening to amei science where we talk with deal professionals and learned valuable lessons from their experience. This podcast focuses on stories strategies. And what actually happened during emanate deals. This podcast is going to be unique bun and interesting. It's one re recorded almost a year ago but it lost production process. This lost episode is too good not to publish this recording this interview chavez a new role at pay pal emanates sales integration which won't be surprised after listening onto the interview. I jam here with avid global head of partner. Channels that travelex job. It is experienced transformational leader with a proven track record and leading large scale programs. Which delivers sustainable change is. you'll experience. Emmigration they were going to talk about. How mea can be transformed to improve integration. Are you today. Javid do you. Thanks for having me on the show. Jason i'm nursing great stuff about this then luke four to look for our conversation as well maybe we can kick it off with a brief on your role travelex and a little bit about your past experiences really sent she ruler metron dates plenty over a year and currently helping them out with the digital transformation with a particular focus on their digital channels and how they go to market with those channels how they reach out to partners today. Chronics typically els foreign exchange from find new ways to sell those products through digital channels Massive inches and shit. Stop happy the amount with them without transformation than having said that our mind my previous experience. It's always been with emanate. Integration was straddled between products acknowledgee and sales operations over all. I think about my rules. That's been very good market. Focus though and that's been a nutshell my errands. Pretty extensive background with the integration side. Of an a what are the biggest challenges you face at that stage to remove five for seven years. I've been counted a number off challenges and opportunities at the same time. Oh jeez approves some of the challenges. I think come to mind is often. I find organizations. Never really taken the time to understand their customer base. I'm more importantly capability gaps that they have would you end up with is organization that are acquiring a company and then trying to integrate into that process. So if you think about that haven't interested in how some obeys nor their capabilities and the gaps in include. End up in a situation. Where are you integrating for. Example a technology or a platform into a very bad pros and that really makes Estimates for outline. So it's really important. I think for mutations to go through some process improvement events project wiring company said they truly understand the is is do they truly understand the gaps candidate close those gaps before integrating and other company because otherwise baseline is not selling effectively. You might integrating a new equality company. Rb may have that approved this but you may destroy i play the interbreeding need into very is important to bear in mind. And i've seen those challenges. Some other examples are obviously where integration leads. A little bit you lay down the line Sometimes just offered you. Diligence with should be not only ruling three diligence. I think in my experience better if they're brought in a little bit early than albeit at a smokes and time and we can die into not some of that for the dow now now discussions some other examples probably off challenges the classic one either on valley drive to do organizations to understand the value drivers detector the integration need they understand the value regime nine drivers and the challenges sometimes time dividing the need to lead your mind is slightly difference integration east coming with a very operational excellence in Minds they're trying to combine to zeh shen reading trying their best change. Show that the original valued reiver's that were identified during the targeting ages are maintained. Hani make sure that those value drivers are the basis ridiculous. Naturally come into this challenge because you are probably requesting a number of states that some of the challenges based and time it really depends on the type of organization that you are integrate and you start some other challenges. I would say pardon sales than arcus strategists. I have week. This is a lot of the times where you're on looking at sales looking at products and in passing that on to the functional leads to manage old must do what they feel is best with that. And what i've noticed is a lot of companies sometimes view acquisitions as were just buying stuff and if you have that mindset it just binds up and then you figure. I don't get how he got integrate. These products hiring on integrates weight sales inevitably end up in a situation. Where you're going to struggle with really degration. Because a lot of the time you'll go to market strategies and your sales products related strategies should always be in the forefront of your mind because the rest of the organization their capabilities treating theory supports sales and fox. But if you don't spend time in integrating an understanding the product sales relations then the rest will always be secondary for a larger risk of your destroyed of the value for their value Off the kind of integrate pounding on an call. How do you do stand. Revenue synergies the very much the standard things out. Stay and the tangible last. It's the dugo bounce. It real estate will get quick. Cut costs but is less focus in on these intangible because they naturally take longer to work because he up more change management not more transformation and a lot more out say leadership in love were radical decision building tangible assets in my view are should always be the forefront how you look at your even capital some of the structural happy love your positions you talk about some of the people of the knowledge why into the processes that are always hidden within organizations and those have those values which don't bis i've seen the low is being challenged inevitable bomb documenting his i integrated so many companies where prosthesis they've never been documented therefore you don't to know what you have and when you go into drew diligence sometimes nobody spends time docker needs they don't have an otherwise premiere on communication typically acquiring organizations are all fair for of communicating intended these acquisitions because they're fearful that that is going to be a fine of key personnel or going to scare off the moment year in a position where you're fearful of communicating because you just can't control the situation typically watch the notations disguise the okay we reported need to knock communicates in because is a risk. I'm the moment joe in that situation. Then you're not true bef- europeanisation. This is great. You may the whole outline of interview for us. I heard one the lack of knowing your own organization To we talked about you mentioned bad processes and we'll get into that the integration leads and aligning them around the value drivers in that lyman in general go to market strategy and lineman around that value in hidden intangible assets and then the general challenges the or communication and the whole reason for doing the deal and we start with looking at your own organization. Because it's it's interesting to me. In right away i start thinking about is human nature where we don't like to criticize ourselves. We always try to keep our mindset and look at ourselves in the most positive way when that's not the key to developing and progressing ourselves. We need to find the flaws and an acknowledged it and so forth. Can you elaborate on this. What does this actually mean to look organization and the deal process if he just put out emanate degration roaming on your is a good point around organizations sometimes forgetting look at their own. Roses is typically organizations when there are performed this sales and the growth. They're all being marginal slight. They actually see something along naturally. They don't always have this mindset ceo jet can we do better how improve our just our existing in world. That's you have a lot of recession. Sometimes if they've got the right leadership they go in and look at how to is my own company outer optimize performance tweak to increase increased by one or two percent if you don't have that mindset hillary's asians shying away from it because it's not a natural thing to do when you want to improvement organization you typically for a how were biz on how retain more has the end to at the sales side of things sales engine. But you don't was look at naturally. Okay how pre my operations. How can i tweak you. Just keep on pining on the movement shui again. Asimo hesitation then you tend to focus but even then how many organizations can you go today and said okay. She'll be approaches. Its value chain is like a four man rich to lot of these. Nobody focus is win. It becomes a little more challenging is located nine. We're going by another company. That's under the law dean within your organization. Say i hired you. And i said hey Javid come to my company. What's your likes step by step process. You would approach in terms of getting companies. Start thinking different about this chevallier chang. Different words rod. Some people say okay. Let's get a customer major. It's not with your customer journey. Mapping out then. You can second-stage okay. Let's get a value chain drove evalu- map around okay. In order services one of the key components in your organization that's really valuable and that really touches us moore and creates value for customers rates to map that out if you can do that you medium level then and you share that with organization has fundamentally rates forget about documenting the low level buying neville to dream if you want to than than that's a great stop because then you start to get everyone across that same knowing save journeying customer but getting everybody cross. Okay now i understand what actually drives value our offering the once you get that then you can start salad. Gang one of the technologies do we are building this or do we need to go out. I'm by the way. How do we improve the customer experience. Can we use something internal to tweak some the more you can do eternal and that's great then when you go on a course you actually truly wire wiring great masson for you to understand your capability and more important than stand in the end how you actually driving value for your customers it also. I know we always focus on the customer. I think in today's world to very interconnected world right. Especially if you look at this day and age and the strange times we're going through its ecosystem. They're going to be increasingly important. Unequal systems don't necessarily gonna acquired. It means this trying partnered with somebody trying to dealer we can and then go on a choir and you can go through society difference in deal gone but the starting point if your vision. His between donny. Chain smoking map as customer journey map. Where are those points right. I'm are we doing something machines in maybe it was just get hostile oregon. Apply somebody it forces you think more importantly it takes you act to why you started this Sometimes that gets lost. Cheery if forgetting ways really valuable. I think this makes a lot of sense. Lot of times we get caught up in the thirty thousand foot view of the strategy overall expand this other geography or so forth but makes a lot of sense really. Is that the or the business. And as you mentioned develop that or map out the customer journey and chain because i think we always forget about it. I think it's a natural thing when you're just in your mind you're just thinking of during the bike things. Do you never go back to. How can i do better. It's weird because we're small company will even we forget where we lose. Tach of it has to become this exercise and we pause to go back and old people in to start doing that. Customer journey mapping was incredible amount of value. When you do that then you start understanding the exact areas where he can create is hugh's back when i was doing like a lean six sigma project. We came crosser prices because discuss who method oh operas improvement and someone. Gaza thinking is great for large. Because they have the minding on juries extremely strange because in my mind the larger the organization. The hardest for you to do this. Because they're very much betty their ways taking. It only go to traditional bank. You look at their systems. Their point is the legacy pros to ship. That changes lot will saying. Hey if you're is asian you've gotta mindset rom. You can do not foster better better because you have a leadership is very matt and they believe that you can do in the minds waiting bended coach. What's going through this. We re faults. I think it's important to constantly have a transformative minds particularly stand age. It does really align people to on. What's the actual value opportunities. When you mentioned processes you had an interesting view because one side. I guess you can almost look at bilateral once. I could have bad process other side as good. Maybe acquirer doesn't have a strong processes the query but a they built this integration plan. And that's what the plan is so we're going to integrate and we're going to those processes of partioned. Make him confirm what we have. You'd library more about that. Like how do you get the understanding of what the bad processes are and so forth in approaching it in integration. Take in ad. That -bility i'd say change your plans and save what does not value opportunity year to capture something where they're actually doing things better than we are getting to. Starting point is always on the type of integration. Doing so if you go back to base it on the products that you're selling so if you're requiring a company that has a research politics or signal customer base than that nationally calls for stronger generation. Now the sad reality is a lot of companies who acquire targets typically absorb rated their own processor view themselves as the parent company because the call the mass over there. They want this water station to integrate. It is quite rare to have a reverse integration those cases which sat. Sometimes you might find yourself in a situation where ovallis the organization quarry may have better process. Be be a better technology. I've noticed is oval. You may see a the problem becomes with their ability to scale it. So i've come across organizations and my boss who probably have better systems and better process scale and the systems that were buoyed or scalable alluded by the efficient. There were efficient than really good force is herbs sometimes scale as a critic so if you think about why you're acquiring a company he either wanna get a technology or you just want to get a customer base to win you. Just wanting customer base grows nasty point where you just need to look at which system which poses isn't escape in addition to if in the important things berry minds inability ration- integration. I did in fairness the acquiring company property But it wasn't scalable tapie had something going to put for your four companies on that system. You'll just fall apart. Would you want to do a here. Is undestand those proceeds And then tried to see if you can mirror that on your scalable platform. There will always keeping moaning and the day. How can you serve. Your customers julia. That's actually really interesting. View even look in our own company. We have a crm system. That's one of the smaller products out there. Everybody likes it. Because it's so simple to use. And we've always had this avoidance of salesforce by while the product. We may look at as a better solution for what it is. But i think he's saying good the problem. Promise it's limitation prolly up to like fifty people and then it's not gonna work well and that's where it makes sense to have something more of an enterprise grade like those or so. It's a really interesting you that that you do have to consider ultimately a actor oppy to The integration leads. You said they need to get an earlier. I agree with you that about ninety plus percent of the time you think about integration lease a one of the key things for me is actually defining be good and then that can drive a what do they get involved in the jury of the deal flow mind integration. He has to be have to be many gems below the time. Pre deal guys to think off integration landing as puree project manager event door project phase. I think it's very important. Integration leads are not just project manages moment think of them as project managers. You failed and if they are only project managers than all right to be to integration lease half to be many. Gm understand business. Please was for gm mini. Jimmy is somebody who understands sales somebody who understands operations somebody you can understand. The technology is somebody who understands transformation. Sunday that somebody understands. Keep so they have to be able to run a business. You have to think degration of in what. I'm combining two companies together. And i essentially have job sending a business. Think about integration. Though you creating a new business bring to get together and combining them quitted business so the money that has to be somebody who can lead biz when the stands is very cross functional. Stand us great business acumen. Who can understand everything across a business so if you keep that in mind versus just the project manage project manager then you start to get to get go so if you think about this standard deal. Lesbian macaroni. Down pre daily typically. Okay identify targets. Get into negotiations as and then close the deal and that into host and integration that innovation transformation hostage situation in the pre deal phase. Most guys typically pretty much development guys so they going to think. I just wanna do. I wanna go into the value to do. Some kind of valuation excel sheets the value of the prize and the to get into sales minds needed to negotiate so that mclaren specific skills. And that's word. I need those coca dome. Guy is easy. Kind of p guides. You need those mindsets going. Do that having said that targeting face. So let's bring it back up to the original. Some of the rich discussion points under wrong. Be good market folks. Understand your customer base. Understand what you're fired if you get a need each gratien nine. Let's say ten percent his time or fifteen percent of his time in the targeting face he can bring that valuing then maybe challenged the corporate development for about the customer base. He thought about what you thought about that. Value to your writing some revenue synergies. Synergies is the wrangles is about. How are we gonna go to reach the market. What charles they can. You leverage same challenges. What are the integration costs around those channels every slightly different. I know so. They can come in any ten percent of the time in the targeting dropouts and then come back maybe twenty five percent of the time some time injured village and then coming maybe hundred all the way through for me degration into tradition of transportation down side note. I think they should be true. Blend of transformation agent the integration stage should be bundled society separate topic. He explained like where this sort of. Gm mindset integration lead. From because the way you describe it makes it sound like it's nearly impossible to hire a party consultant firm to take that role on not on skin sets if you take him out. Third party consultants aren't have jim. Are we looking at somebody. That already has a lot of existing knowledge about the business. And how a works and the pieces. Are they connect together. Or is this somebody that does have that mindset. But they're going to have to go through his learning curve to learn that stuff and then that's fine. No no i think it's the mindset to gm's have the right mindset and the gm see you need to go on hire somebody who could nerd pretty fast and really good integration leads how that experience the have that mindset to pick up things fox. I'm basically if you're a season integration lead. You have to do not. If you're just a season project manager who's worked and that's corinna blew me wrong. You need managers there with the hassle of integration. Is interesting someone wants told me that startup. ceo's make national good fits for this because a bill companies from scratch and understand how mechanically come together and work. I sort of backs that up. That i actually agree with that i because they do have that mindset because doing everything there jack Forced to do and the force to think of every because it. Just don't have the notre where you're handing over functional areas of support especially when you get to around twenty thirty headcount and you actually start developing those functional leads. Then you really get that whole sense of that the pitcher and how they those is or together if you think about the natural progression awful lot of people who are in relation leads the naturally if they don't want to continue it in a gracious naturally floated to heading business units they become general managers Because they're just growing. It's a natural progression. I got a good sense of our lead integration. Shouldn't be a project manager. They need to have the gm caracteristics. We get them in early and we talked about the go to market right so when we bring this person early. Are they involved with that. I guess i wanna get a sense of like exactly when they get involved. And then out that go to market plan sort of unfolds when i talked to some of the companies like the folks at cisco and their integration folks who are in really early depending on the deal may be in as early as before they even talked to the target company and essentially. They're there to help validate the value drivers the deal. But i i love to hear your perspective on where that person sits in the role and for that go to market aspect of it to this should be role rady from the start when the targeting and if you can i consulted burns are moving towards getting integration team to embedded into their corporate development did involved earlier but it's about that gone back that level of percentage of in itchiness serbia hundred percent but i think they should go in fifteen percent of the time leading when the trumpet so when to start to kim jong it decision. Because he's back when you for a moment when you resist nasa movement. You're actually discussing. You really go to market in direct. You don't acquired some company for a specific reason. Nobis it finding that strategic fit the moment you start talking about us it and why you need to go on. You are indirectly talking about the golden bonnet elements. So it's really understanding. Okay where did they what. What is good. Who market is how do you go about leveraging. The assets of infrastructure compete to sell you a very different view on this. You want this. Integration lead essentially develop investment. These not no not develop valley valley validated. So the corporate guys got idea and they come in and say okay. Let's start thinking through what the go to market is gonna look like and that's probably more point about asian. That's unfair. Yeah because you can have any investment thesis around that but how do these actually go and take that into the market. Do you the life. The way you bring that live roles beatrice some god market approach right. So when you think about go to market you're not gonna think about customers and signed guarantee when eaten about the pro targeting company or this their natural and think about okay. Customer base the incitements trying to extract a. What's the word those customer segments and they want us to go further down brown. Okay how. I bring that those same of how to actually being tained that same. Let's say sales in growth performance in the new world. Right in order to do that. He didn't have a mindset of how each babies two together as you work could. Not if it doesn't work that you have the s issues around there that whole ninety would have gone. They destroy the moment. I've seen so many companies going down and made a deal on the basis. That okay. I'm acquired this company this company so this customer base x amount of revenue acquired. It is it sales droppings each out so you need to be able to validate that. And that's where. I think the degration guy comes in. If he's the ryan he has the right skill set quite often uzi. Lalonde resist lean integration guys because they have the wrong skills that they might be right because you know you might be high hiring or thinking of rationing in the wrong way if you're just thinking of them as gems yeah definitely don't even both because they have valley date a lot of your go to market some denial. How do you go about integrating these to the luxury of the school to mark looking at channels looking your customer base looking at the people skills art. It's looking at technology and really understanding where there's the hidden valley and it just helps validate some of the assumptions made very early. Integration lead is actually developing that go to market from the beginning now. I just had interview last week. With carlos esta who suggested that annexation lead should be doing this year the target company. What are your thoughts is curls. The trend of integration. And he just look at this across the loss and twenty years plots. We all know that. Hey whenever we acquire you're gonna destroy value why it is. Just emily's speech knows we spend countless time that Hungry not destroyed out from god. Just go to the extreme whereby they just buying company and don't why because they know the when we do these let's just leave them on the side and the best that is working you're somebody who's arguably once the support the my support and that support could being okay just just integrates. The administrative burden areas right like for nance legal at some of the purchasing cited Okay and leave the rest where that companies are reading what is good at just let is just finding that right balance the absolute in when we're possibly have to get the right integration. Need in at the right time in very early very early in the process to help challenge on or collaborative engagement with the rest of the session and including talk getting the company integration. These needs to be very good. All rounders me like a a step by step and terms of what that as you mentioned a lot of things in terms of go to market the key points it has started and what they should be outlining and doing it so so when they come into the presence for talking about hey early on billing go to market plan and getting a sense of what that looks like from both companies in in what this looks like in terms of were closed. And we're going to actually have this plan to create. I guess maybe if you had a sense of like what would be the pacific steps to develop that kind of go to market plan. Laid them in a developing. Maybe the market plan starts with the type of capability you wanted to acquire or the type of company on acquire so it starts with strategic planning stage. Right that's where we're go to market position starts organizations during their strategic planning phase will decide on what it is. The need to go on which strategic initiatives were on throughout the following year. Or you're gonna Where the failures gap. It starts with your strategic planning. That's where i think you should be getting the right. Integration guys there to a understand secondly is go through a bit of a discovery around. Okay there's a perception that you need to go on our company to close that gap integration leads phero detrani habitat quickly going around rooms. Asian new going back to the earlier point. Do you understand your capabilities process in unchain. Yes we have choir. Nothing will be one of the stages if you're there then you're okay. Lead the deal flow traits known course and then they come back into diligence to firm up even more validation around the the talk radio station because night gone for you talking five line if now down when you're marrying down over the ingredient the criteria that were was agreed during your strategic planning so that's where you're constantly lining then you. Obviously they go go Planning that out distraught. Formulating integration and during the regular. It's because they're a little bit under the rhys issues the earth and that's not moving into fully baseline iran Things that's where. I think now the point areas earlier on. I think each planning should also app time. Have an element of transformation lied. So if you're going to see the value chain you see the proceeds towards okay. Let's have a collaborative mindset around the to concessions coming together to form an end state as opposed to have instinct which is company be a integrated company. Does the subtle difference there between those two states. I think if you go transformation ponant embedded within degration foster to breakthrough performances on your end. State is already in a- limited mine too when she required a company you don't just homeless thinking of integration. You actually can transform. 'cause we think about the core. What did you acquire a company. Acquired a company. Because you're not good at something but if you're not good at something that means you need to go on trump's for sometimes i'm running the risk of being fueled typically here sometimes integrationist transformation for should be one of the same during nyfw think about reminds perspective so i recently published a book. Called agile emanate and is really driven off of bowling agile principles and appliance emini and a good case was the was around transformation. Lemonade because you had this sort of value in mind with a company or buying you're looking to transform your existing business model but it requires this high level agility because there's just so much unknown that as you go through this process you continuously get new information and you're gonna identify you. Risk new opportunities. Continuously announced whole premise of having this adaptive process allows you the after. And keep changing your plans. When i interviewed google james harris had a great example. They had a manufacturing company and a similar as your example they found out there manufacturing processes actually more advanced bands than what they had but they are able to quickly change negotiation and start outing their manufacturing process do what they had. Does that at all. What's what you're describing us. I think you mentioned who will come to happen to. The reality is if today is working by the way i do. One hundred crave was set over there. I think what i noticed. Interest is we automatically just to emanates these days. But i think we should who was a bit particularly in this era of digital of you think about digital transition is all about relationship collaboration. Inter connection something that kind of caught my interest. Basically we naturally need straightaway in gos- going in acquiring the company to go sold problem or do we think in particular large companies notch companies large. Was there think that they need to go on quantum but somebody so they can control the outcome. Control the asset. So they're not better something going by somebody who's good at it. Great built for the standards emanate physician car. Olympic got a notice in the large companies. It might have a strong customer base. Large he might be more beneficial for them to kick off his ending. An investing trading necker systems because one is cheaper about foster to go do marlon going through full ebonite but even those agra system those partnerships in some cases on the jail time could result in a minute you could on acquire some important part of this world is transformations automatically happening whether we want the where we're just forced into around us. Who is changing industries. That changing lama concentration around about it. She behavior consumer choices is wishing us to adopt some a digital transformation. Some companies are better than others doing than some companies might go digital transformation on one element of their value chain things. Some guys referred to the digital lipsticks. Therefore being captured the value simply. I don't think it's over the important in an era where you can develop the right eco-systems. That's great google's is pretty sure google's got hundreds of protesters today consists senior day. You've got Think of a company today was create. I don't know like a robotic vacuum cleaner. By what are they gonna do. They go whom partner with somebody that has. Maybe i and somebody's got a sensor. So this is what he there acted by each can. Just create nicklaus system. You have good view one. This is trending right. I think people are acknowledging. This more. And more i think to the point where you need to start restructuring the way you have your team's set up because some organizations depending on where he station they'll have a completely separate strategy team that offers more the partnership aspect then corporate in a time partnerships or per development. You got the right thinking that is short of at this more of a holistic view with as sort of dry that partnership in that ecosystem around it would be much more of a utter entry point than just jump into the a right off. The bat seems like it's so disconnected. It's the people are just purely emanate name machine. And that's it but there's none of this like holistic view of like what we should be doing between honoring and looking at 'em approach and that should be bottled continue should not be one of the phases often physician so maybe you start off with creating a video necklaces because by the way partnerships on ecosystems the couple of times you just go partner and aren't you chips and even within that consist zaman activity. It depends with his concentration of They might have less willing to strengthen. Yeah so maybe. For financial stories you might see resist offshoots inadequacies and creates. Its but there even though is farming Inequities love over in in in media technology companies. So i don out here by the alexa new all over thirty artists involved in that in the necklaces and just going to create a interconnected offering. You see these markers so that maybe that you may thinking are on. Msn as possible going on and creek consist. If you launch company got gases to go do that you've got a big user base creon nicosia's of where you make life easier for par to connect and better serve customers then the to be out of your thirty forty partners you might feed her. Other partners acquired critical going back to the valujet discussion so that i have control over their assets control over the strategic direction. It's a complete break from may. Just be the first step towards acquiring immediately. Think about in your more creative way in the slightly different way. What is the purpose all whether you're doing portraits. And in the end it re boil down to how create value for a customer. And if you go dot buds nabbed the oldest going to have value drivers or front ills going to achieve some value. If you take that approach it might be longer than expected yet end. You're actually getting in your driveway. Created obviously if european for doing this your your agenda your mindset might if if you are companies acquiring for strategic reason that you could the from quite good driving value shorter at one point one some four next six whether the still the appeal right so they might be better app setting foundations to do. It's an interesting way of thinking agree. I'm gonna follow up with the after this. The about our Channel partner strategy could be your own ship. And its was. I go back to it. Value intangible assets elaborate like. Give me some examples of that. How do you get to the point where you can really find it. An act on it to somebody. Intangible lasted samir closely related to human capital coast to coast relating to knowledge. That's very hard for you to get a handle on even during georgia diligence. Also even when you've acquired the company away to integration face is very people intake people's hands and minds and low times companies. Don't document your real Real knowledge is better with. Somebody's mind and naturally they think about he. School waits lower employees that knowledge to themselves. Because the it's the want to relinquish don't want to necessarily write that down approached though and i don't want to go document not not because it's their survival job. Think nevertheless i still see today. You need to be able to understand that and make sure the not. This is superior degration because that's valuable asset. It's valuable to you. Understand what it is but few standard you need to be exposed to any just. That's one example of intangible assets though precisely in structural relationships and the collaboration with partners is extremely valuable and again that gets hidden probe. And i think that's probably one of the reasons why he started to see is the word i've heard for them personally. Experience for example to banks now back into the bank and suddenly you see their customers disappeared. Because they're not receiving the same level of Apples but why does that happen it. Because they're not necessarily thinking about relationships with customers and with Again is going back into sales. Matt is the managed personnel outage. Figures back tony by the one of the craziest thing that i've seen to sales in almost coming goes ziemba. But they're always going to because they'll be match did on the people. It's wrong relationships around cooperation. Doron age that capital within the knowledge. How do you trudy managed that value on gruber dora. It's hard for people to manage to harm to create the right. Kpi's reports when we go is to janice go back to the time glass which measure that becomes the basis of this off so those intangible assets that we really stop ranya Chilled and you customers customers. You could probably put a value on a door that the two what supports it gets mutated or try and get a handle on. Tell me how the reality is. Actually relations with inquired going out and speaking to people having that she would. Okay okay human hidden value. You gotta come back with more human effort on your end of duda and hiding a human connection business. Beat uconn let go. It makes it a lot. Easier will respect. I up front with teams. I think should never shy away from big history for front them respectful. I think people understand respect you for its been. Relationships is a very very bored requiring leaders in very important for leaders to be able to lead from the front. Take some time to go understand people. That's there it doesn't necessarily mean that you will have to make the hard decision making the decisions once you've known some day in so a lot easier to do. Let's take this even deeper into more of a tactical stab and we talking about a any describe coffee with as many people's again into these little one on one jazz or having more like town hall meetings group meetings. What does that look like. The first step is now having tangles. And if you can moving down into the second leadership awesome message becoming that agent change working with the peers to second what what type of messaging are reported. Now there how putting it should not just be just email ish not just if you call them personally meet. People could be variously awareness. There their social chaptered and things like that. We tactically things in place but leaders need to be seen the need to be seen whether they can also see the direct messages coming. Not only from the manager manager. So that's the Is being in the forefront of china's much as possible frightened mineralisation leaders need to be approach saying these people are making deal points or he asking questions. I making the action one. Is this being acquired. What reason the required. I think an important thing to remember is people are looked especially in this day and age with information center. People are law smarter than and they know. Wait for us on digitally. Why work wired going back to that with the got. Have a discussion with them. And in non control with what type of messaging or how. They're interpreting message. I think it's very important to be able to have direct and opt for communication with in the republic company. There's only so much you can nevertheless have conversation. Let's coming back to having conversation with the teams now. You may be able to go under this one by one. Never always make sure that need is an action scene backing up there. I can up their decision acting out. Whatever their date with. It's hard choices. Need to be seen it back out and be up sometime in quite dramatic about this. It helps to get through that the chain management charges. Because i've seen a lot of leaders who shy away from communicating because they're fearful of having a business as usual and that's the worst thing you can ever do worse to please concocting something up in their own minds has more the negative impact interesting thing. Yeah versus he affront that it might be painful for a few weeks or months but you can manage it a lot better. Because you've had that connection. I think it's now. Fear is a is just not true psychological which you say those points you mentioned. I'll overcomes a poor communication challenges. You mentioned earlier. Who communications sometimes. It's not so much in a frequency of communication content and the land took about communication. The old statement. You can never over communicate. I agree with that too. Certain extent but the realities me receiving two emails a week in my inbox is like okay. So over communicating is nothing wrong has been but i think what's more important is grabbing newer. Eurod you're better off doing a fifty second youtube over sonata. Social media single social chats an entire organization once a week and having bite-sized information. That's meaning on the talks about. Okay what does this actually mean for me as an individual. How my impacted by this information and if you can just do that and fifty second half for example. Go there and say. Hey we're required you. What you guys must be worried about. What does it mean for us. Digital took about two seconds. What are you gonna do address. Those were not functioning. Gonna be worried. Okay yeah then you start to diving. You hold that are addressing specific concerns in creating social media. These days can be great. You get on the pulse of normalization. You get some. What is the general trend of thinking within organizations in addressing leveraging technology. Today you can do it. Because i needed motorization. You are digital companies. You could probably go and speak to the people and that's a lot easier to do. I i did that for years ago. When you will is a lot easier to do ways. Large dacians way to please vickery tools for some contact focus on short messages that are meeting and meaningful because it's addressing. The specific need off the example. He started giving because it it the tone of empathy. I understand you guys are turned and things like that. So that's That's pretty cool but also focus on the positive was negative. Zombie might be corrigo digital here really interests not creating buzzer that we start building. This grand vision of the beautiful ramona's urged together. Yeah step forward to address the good of the bat so always bigoted leaders have to constantly. Share communicates successes communicate interests. What are they interested in. What is it Interesting achieve don't have this long winded messages and very unlocks in the whole strategic stuff. Have messages that are powerful. Connect emotionally are just going back to this idea of. Why do we exist. Why would exist. Can you create his emotional connections. Bite-size communication yeah. I think those things were powerful and uneven encourages. People to come back were encouraged. It will get out a bit reminded. I think we will lose. I've just noticed a lot for the desert using a little bit forgetting it and really in this day of the reaches a lot. More how districts ability got a really strong point. I want to step back a little bit. I i liked that. We went through all different challenges and built a whole interview out of it. What what practices do you find yield. Best results challenges. That i mentioned earlier on. I think one is. Let's not automatically think that one size can feel having said that. I think you can create the right framework in the right guiding principles those can be based around the type of companies. You're wiring the reason. Why talk about guiding principles. Maybe frameworks must pose. Do you know you'll tradition. Played knows relevant to this day in age because when you're acquiring a company in france versus the u cavers the us they're going to be a number units there. The both coach from economically though can be hard to just throw what's artfully have. The right the right framework to think about so gone principles can be thinks. Light have outside in approach to these thinking about him. I thinking of when two companies for bunny you're going to create a new walk at condition. They're indirectly so you think about what is not new marketing additional owing to create value. Integrate is around that new market conditions. That you just created by combining the being customer lead is is one approach the other when we talked about is ensuring got the right relationships to make sure nasa greedy strong principle there because it helps you address. You're a german disturb. Make sure that they are not impacted. And bruce way the oldest keep those relationships that collaboration though that maintains it right service nevers megan third would be around ensuring that you've gone your integration brands. Very very tightly couple leads value drivers that we discussed. If you can't leak the is that old saying measure something then get focused on the right things in their own achieve everything. You're better off going integrating transforming handful of meaningful things than just thinking about his own throw. Playbill dumai folks ulsteinvik gration. Let's go switch off hand or the usual stuff which i did in my earlier. Years of integration. I don't think that certain words this day make sure your van kelsey prime value and again we were talking about that. Think about it. Let's create you working value or calling improving the that could be your works and that works pools individuals for both companies to work on the transformation or anything that's going create a collaboration law but just as opposed to token amounts human resources for sales integration. But if you're combining customer propositions do that naturally bul naturally sales rated his fish on what are we selling bluish thus discount example another the best practice dictionary integration. Kpi's there or transfer. Be what i gonna call the mixture those kpi your value drivers and you barrels having maybe four or five the annapolis like twenty j. b. is the something's going wrong. How big four or five. Kpi's you definitely need some solid project program management there if you create an that's great if not as mature at your project and program management leverage some of the pm ohi most do it without integration on trump's mindset. I think we talked about insuring. We've gone process improvement transformation methodologies there so get some people who understand their mindset so you're looking at customer value chains is thinking about how you re proving new overruled. Its combined organizations. As opposed to one company absorbing that processes having their own baseline. i can take years to To states they don't want he's obviously trying to be a As tool about everything's all about agility and you just never know how things out he was. Welcome to work on the northstar. How we get there. We just need some agility. How because you got on that one. It's also being as as possible is critical this day and age chewing because now robert is changing. Changes needs change so we have to be as agile as possible. Every industries is is of hit on his disrupted by changes. Might so jimmy d brexit. It's k- great tips. Any time this is the president gonna bounce ideas having a discussion around these topics passionate about good market. How you go tomorrow with nasser. Partnerships physician topics. It's a lot of the mary throwing out their basis. They so sort of to wrap up this interview. Can you tell me what's the craziest thing you've seen anime. Mention one is so couple of sales. Seems really considering those territories that were their own who are two neighbors. The company literally coming to close to bill is it just didn't sales in on the approach in surgery so that was the one example where sales market was just next to a functional sales not to go back page an endless face it. They're focused and there was launched going wasn't about how to sales teams what propositions of interest of the day. The nabet klerkai go to market. Now and now they're ready to each other up. We were an indie understand. I work with the sales team. That's on the bachelor on one was undocumented brucie's which meant that becomes shifted a Into backoffice dissenter. Excellence but we want. It was the value promise and shooting it into the back with his sin direction. Met consumers were served in the right way because we didn't quite understand that process so back to shifting. I take the time to understand not only. What is that posted as a. What's the value to that. Because you can indirectly ship the process the back in the Gonna make some savings over there. You're going so in a central but in that is sometimes can destroy the long term value if customers disappearing and the not serving the same way than bisley offer is impacted now for any savings you had in the long run. That's the value. Distraction said a couple of examples of critic saying but the sometimes you just go at the time mine which trying some things mistakes to learn from an ultra repeat in Comes easy now obstinately. And why understand that mostly positions it was ended up destroying bit value. We i think the whole point of this is how we get better at not. Destroy the valley. I think we've learned a lot today. I really appreciate time and enjoy this member station. And a have more of them look forward to participating in special. Ed thank you thank you for taking the time to explore the world of enemy with our podcast. Please subscribe for more content conversations with industry leaders. He like our podcast. Please support us by leaving a five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by email. It's qissan k. i s. o. n. Deal room dot. net emanate. Science is sponsored by deal room it project management solution for mergers and acquisitions additional educational content is available on deal rooms blog at deal room dot net forward slash blog. Thank you again for listening to science. See next time. Using opinions expressed on emanate science reflect. Only those individuals do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.
98. Career Paths in M&A
"Hello amna france. This podcast is brought to you by deal. As coming back to void western. Hundreds of hours manage axel traffic and building our reports. Do you want to make more efficient. Fly-half view dooms name management south. Seiji time headaches and improved rations realized valley faster. Learn more at bulan dot net your deal. I'm ki sam patel. And you're listening to emanate science. We talk with deal professionals and learned valuable lessons from their experience. This podcast focuses on stories strategies. What actually happened during emanate deals. Welcome signs live putting together. Companies is complicated and them art even more complicated. This podcast series. We interview leading emanate practitioners. Learn lessons from their experience. Learning proven techniques key to optimize. The your emanate practice very interested in keeping up with the latest foamy. Science visit dot com newsletter. I'm keystone patel founder of deal room day. I'm here with matt. Arsenault vice president of corporate development at they ran talk about at navigate. The mini career paths of manet. Hey matt maybe you just want to kick off with a brief background about yourself. I started my career in young on the accounting side. So i'm actually very odd. Emanate leader in that. I am a cpa with my chief. Accounting officer loves. But nobody else understands. So i started off at the accounting firm on the actors and very early on in my career really decided to go more towards the deal so moved into our friends. Actions advisory practice for years into my career started do deals as an external consultant until i moved to a bank public company that was doing acquisitions and they had just bought a a large division where i stepped into a finance accounting transformational row really started my career around those deals on the finance and accounting side and then worked through a couple of career. Change is at ge an emc to get closer to the transactions finally getting to corporate development at a small company called bridge and finally moving into the position at champs recently. Well what are some of the stuff says someone can start making a transition of corporate development. My path is an interesting one in that it wasn't your traditional traditionally corp dev resources either. I bankers former you guys or management consultants. One of the natural ways out of college is to kind of get yourself on one of those career tracks that you go out and you become banker or a management consultant. I was not one of those traditional paths. The advice that i would give is really get yourself within your areas of expertise. Hide towards those transformational or change management type programs within your company as you mentioned very early in the introduction. Ma is really a transformative step and it is really difficult to do. Within an organization taking your area of expertise whether be sales or finance and accounting or hr or it were product and finding ways to build in that change management and that idea of acceleration into how you take on your daily tasks. Is the advice that i would give to anyone. Who's who's thinking about trying to get closer to go up or or to. The emanate process. Are there certain roles that are easiest to transition from corporate development. If you think about the main factors of corporate development it is that change management it is the strategic thinking and kind of that partnering across an organization. It's got an element of sales and relationship building and maintenance and it's got the core of finance in the background. I don't think that there's one career path that makes it easier but having a strong financial acumen and understanding how to build and maintain relationships within an organization is really important. I think if you're not gonna go one of those traditional pass of external consultant. You're gonna try to do it internally. Having a role that is exposed across the organization people who are out of program management within it or hr teams or finance teams or sales operations are audit management the roles where you are exposed to more than one senior leader is really the best places to start because you're starting to think cross functionally and think about how those transactions will influence more than one department. Did you think it really matters of what role you actually come from. I don't think it does. That's the beauty of this career. Path into corporate development is the expertise has to be so broad that you have to teach yourself constantly different things and different approaches. Different companies will lead with different. Dc's around why an as is valuable. Some very product focused some are very sales and go to market. Others are really cost focused in can find ways to pull costs out finding the within an organization and really knowing or feeling how that organization is approaching. Manet is almost more important than where you come from. So that you can build the appropriate skill set execute on that strategy our you able to make such jumps from different careers. The thing for me has been that. I've always been somewhat around the deal. My role at emc was i was kind of a divisional fda leader but it was four an acquisition that we adjust on. I wasn't on the upfront deal team. But i was more managing it across the board my career at ge. I was more on the alliance aside in business development and helping to manage some of the ge ventures portfolio companies. Who honestly didn't really know how to interact with such a large organization as ge. I think there's this ability to round out at skill set by taking on different challenges taking on different roles. And i would say not one single step in my career got me there. But it's building on and rounding out those different talents around what is important in manet and making sure that you can't build those experiences over time is really important. I went from being an external consultant. Just on the accounting side to being an internal accounting and operational controller around acquisitions more to a fema person around acquisitions were to a business development person and then ultimately was more on the integration side and have now moved more onto the deal side so there are kind of natural progressions throughout their. It wasn't one giant step i. It was a lot of small steps along the way. But it's gotta be something they're missing. The obviously had interest right. You guy one are in your foot. Emanate you mentioned going from immigration and then in the corporate development. I'm kind of curious. What sort of half looks like thinking and you gotta have to do. Some level of influence to sort of it that opportunity. Yeah a major part of the corp dev job is sales and part of that is in yourself and saying. Hey i can do this. I've been around it. I understand it and finding someone who can believe in. I think that that's a really important thing. Along the way is having eventual or two. Who understands where you want to get to and can help you round out those pieces. I had a really strong mentor. While i was at ge and a really strong mentor had ever bridge. That really helped me understand. What are the pieces. That i was missing. And so that's really important too is whether it's someone within your company or someone that you can meet. Don't hesitate as someone who's looking to get into the community to reach out to as many people in the cortex roles as possible because a lot of us will say. Hey this is how i did it. Each of our stories is going to be very different being able to understand what you're missing and get that mentor. Ship is really really important. I like that. I'm going to break that down a little bit step by step because somebody's listening to this. This rag a little frustrated with some of the vice penal to high level in a sounds good right getting the mentor. A gone lincoln and connect with you man. Say hey i'd love to just hear a little bit. I'm interested in career. Corporate development career path. Maybe goes beyond that in terms of some practical steps to frame relationships. Mentorship making sure getting value out of it and it's also a return for the other person. There's the idea of also paying it for the idea of being a mentor. Down the line so people who are trying to follow the path. That's enough for me to get out of it. Others will want find ways to build relationships with with other people and find different paths. But that's one of the things about corporate development. That is interesting is every conversation with someone outside. The company is an opportunity to learn more about different space. A different approach or or a different way of thinking as you reach out detailing what you have to offer where you are in your career is important because it will help set the tone for the conversation and not just doing it in a way where it's hey. Can you get me a job on your team. it's more here's where i am. This is what i'm thinking about is where i am being and give that mentor. An opportunity to give you feedback and and think through that feedback. Cold calling on linked in his is very hard to do. But i think that that's another skill set that is important in the world. So how do you approach that message. Only out your approach that overall idea if you have a contacting common. It's always easier if someone's at your company it's always easier because there's a mutual way to to say. Hey we both work for a company. I really wanna learn about the process. Of emanate what are you do on a daily basis. It's really easy to take those phone calls from someone at your company but there's also alumni networks or hurt relationships that you would have mutual connections leverage those relationships as a way to learn a little bit more. If you am one of the messages i got from one of my colleagues was was really helpful. It was hey. I'm really interested in this company. Mad i see that you're connected with his. Vp of marketing. When was the last time you talk to them. Would you be willing to make an introduction. I think something as simple as that someone that you've maintained a relationship with really goes a long way because now i feel like my relationship is valuable and my connection is valuable. Gives me an opportunity to touch base with someone who i might not have talked to a couple of years. See how they're doing what they're doing in their career laying those types of things out that say. Here's why i'm interested in that company or that type role i've already done. The research grew your connection linked in to say. This is the person that i think is best equipped and you make an introduction there and oh by the way man if you know anyone else that the company that isn't connected you on lincoln with love and interaction as well okay so we're talking about our internally a maybe there's a corporate function organization rat will make friends with them introduce yourselves. I'm you're interested in learning about them. And and stuff like that over there friendly guy like matt mortgage with you. You mentioned the common contacts being if you got an extended network with folks in corporate development. I know lincoln sales navigator. Let's do that sort of detail search so you can find that idol even lincoln premium. You don't have to go all the way to sales navigator if you're paying for it on your own linked to premium. He gets like six hundred dollars a year. Not that they're paying me to advertise. But that premium function is good because it gives you that ability to surge gives you the ability to send messages to forty people a year that you're not connected to so he does give you some of the tools of a sales offering but isn't as expensive as the sales got that we got called outreach. Which is my classic favor. Don't be shy and play the numbers. I think my experience. You won't send out. Like i request one hundred fifty people connect with you out of out. He should build at twenty thirty about it. And that's often like you'll sourcing right so i often say as people will ask me. How many people do you have to talk to you before you get a deal. And i say it's usually about twenty deals. Where on reaching out to someone that will result in about five ish yields where we're actually talking to them on a detail basis were will need an nda which will result in about one. And then you're closing on hopefully reatified or four out of five watts. If you think about that you've got a top to almost forty companies to get a deal that practice and that ability to put yourself out. There is actually in an odd way learning the of function. I told noah lot and being okay with hearing. No that's where the the sales aspect zim right. You have to be okay with your know. A little more than than most people are lot who got the networking component of it. Both your network existing then being able to do and be shied. Houston cold outreach. As well we talked about some of the the big thumbs moving from the different career paths. Was there any other advice you give around that. It's really hard to make a two step move at the same time. It's also patients in your. I've been around since two thousand and six and my first real or deal. Lead position was in twenty twenty one. It's been a long time where i've been around deals. I've been thinking about deals. I've been finding ways to add deal but value around them in a. It's about patience and persistence in a lot of different ways and finding that niche where you can continue to add value. I think that that's really important as you think about it. It's it's not necessarily going from an eight-year-old or a fta role directly to a Analysts it's not that it it can't be done. It's just hard to do also expand your time horizon. To something is is a way to solve that same problem. Are you on a strategic operators inc element. It's really about where you unlock the value. There are certain companies that a strategic operator would not be of much value because they have a very clearly defined emanate strategy. That is very Optionality having someone who has a background would be really valuable to company. That's focused on that a company. That is really focused. On international expansion or sales market share. Acceleration may be looking more towards a true sales operations or a sales executive beyond the team. The companies that are looking for strategic operators are those that wanna find allan's and understand that in the long run unlocking value through is really about managing change and really unlocking the potential of the two companies together companies. Who are doing emanate in a balanced approach. Where there were they're thinking about. Acceleration across both product and market. And the kind of often ability or scale at the same time are the companies that are more likely to look for a strategic operator versus a a banker or a external consultant contrast our profile from the classic profile orbit. Vilna professional. it has more to do with the internal operations and setting up the internal company for success than it does the sourcing and identification of ills externally in the corporate development world. You always have one but inside your company and we're outside your company. It's really interesting job in that. You're both understanding the strategy and operations of your company deep enough but you have to understand the external side of it as well. The more historical or devils have been much more focused on the outside assuming that someone who comes in and learn the inside weekly and so In either banker has those connections in get ill sources much. Faster is the theory and has that kind of ability to find additional targets or source additional art a strategic consultant really understands the external forces that are being faced by accompanied the different threats and opportunities out there and so the idea around a strategy consultant is that they have an understanding of that market lands and have a strong put out side and who the competitors can be. Differences are by different regents. The strategic error is really that internal focus. That says. here's what we do well in this. What our differentiation is. And where our risks in our threats are internally and is able to learn those external spaces if you take those three different types of people right. A strategic operator a management consultants and a banker every single. One of them has their own strength and weakness but the ability to learn. All three of those things at the same time is really where the value is created. Someone who can learn how to source deals someone who can learn how to understand the competitive landscape and what are the points of differentiation in the market and somebody who can learn. The internal processes is really when you get a valuable or development teams. They can really partner with the organization to think about acceleration of roadmap acceleration of scale and can be that additional tool to the organization of the diversity is really it is and that's where being a part of the broader management team has also really important a corporate development team of fifteen hundred is way better than a corporate development team of one or everybody in the organization. Sourcing deals are thinking about what those external forces are is really important to make me successful in corporate development. Because you wanna make sure you don't miss an opportunity. You wanna make sure that you're not turning a blind eye to a thought that somebody in the organization have that's really a an important thing is to build that across every function in every level of the organization. So you get as much funneled coming back as possible obviously corporate development role j.j. Over the years. And this might be. Also because i've from larger corporations to more recently Companies that are looking to do it. The statistics around in a really been out there. So only forty percent of them in a is actually created when it's completed. I think that a lot of corporations are starting to really think about the process of strategy in the process of manet. How do we set ourselves up or unlocking value. And how do we build it out. Serial acquirers like emc was or open. Text is a really about setting process up in and repeating it over and over and over again smaller companies. Just don't have that opportunity. So i think what has changed in a over. The last couple of years of my experience is really that focus on that change management and and the transformational step and helping to understand how the different pain points in growth points within the organization can be accelerated by him. They emanate was kind of traditionally thought as a way to make. Leaps emanate as trending more towards ways to make incremental steps along. The journey is really interesting. How do you think your peers that have been the field longer or perceive those changes the really good ones have always kind of thought about some of these things along the way. One of my clients when i was young was sap very early in my career arlene. Who's now cfo at situates said to me during a project emanate is not a strategy in itself. Not ma is a tool of strategy. And i think that that was a really important thing for me to here. Early in my career is just buying growth or just. Buying companies isn't in itself a- value created. It has to be a tool of plan has to be built into that strategy and so i think the companies that had already realized that and and had implemented that for people who have been in the fields long time our understanding that and. I think that that is really coming to fruition. Because with all of the money out there with facts and with different t e firms. Finding a deal isn't as hard as it used to be right. The internet and google searching you can find the companies that are out there basically across the world. it's really understanding which one it's in the organization and not the thought process that even some of the longer standing emanate leaders have been thinking about for a long time the idea of fitting it into the strategy and building the land around strategy. That's really where before. Winning emanate teams are our operational capabilities effective corporate development. It should inform. The targeting is how i would say that operational capabilities strengths and weaknesses are opportunities to identify things that will help. So if a company is really thinking about things like federal or other security certifications. Now when you're sourcing deals where you're talking to companies understanding where they are in their fed ramp or or in their certification iso certification process could become a benefit because it will help accelerate that. I think that it is really important to understand where your organization is and each of the functions within your organization in order to better the targets and build on that idea accelerating up when i say accelerating roadmap it's not just the roadmap of a product it's the roadmap of the hr team are. They worried about diversity and inclusion. What is the focus on is it. Internal momentum is at hiring. Where are they in the process as you start to think about each of those functions and where they are today and where they want to be in twelve months twenty four months thirty six months. Now you can start to identify. How different targets will fit into that plan for each function. You're never gonna find a target. That does everything. But you have to understand where we'll have that strain and you wanna make sure that you're not straining same operational team over and over again or it will just become a burden on the organization or did you think about the future of corporate development with second look by. I don't know. I really hope that it becomes Eager piece of the overall puzzle. I think what we're seeing in the public markets right now is more and more companies are trying to do have and they're really trying to find ways to get that inorganic growth or that inorganic capability and accelerate the idea of corporate development. Being not tool to take things that would be two or three or four years out an accelerated today. That's an exciting idea. Across most of the management teams. That i talked to it's just the multiples evaluations. That are out. There are really quite rich right now. Making those bats really is putting some regular around that process and building out. So i think the corporate development is going to become more of a operational enhancement as opposed to just an adjacency or a market leap tight strategy simply because the expense. That's out there now. in multiples that are out. There now are kind of forcing people to think about the overall risk that they're taking any transaction or that. Come back to this bandaging. Some of the organic growth with no organization yet and really understanding. How the organic and inorganic growth play of each other simply buying a competitor in a space to accelerate market share. The market is thinking about that kind of understand that you're just accelerating that growth unless there's a story as the why that matters those kind of market share accelerators or or product pack on and those have become less of an interest to investors versus. That adjacency explain why you have that authority to step into that adjacency. And i think that's where a lot of this operational side of that is has really started to build data argue back into the job market place around opportunities of the feel. There isn't enough exposure around career. Passing emanate everybody defaults to banking or corporate. Fs one that. There's an undergrad degree for that. I know of not. Here's a master's degree for it or isn't there isn't not that i know of. Maybe there should be. We have the science academy earn. You know that's been the initiative since last november. Start this online school. And i think that that's the interesting thing here because court. Beth is really across multiple disciplines. The colleges will teach finances. They'll teach you they'll teach you a strategy elements get a masters and mba even masters and finance or masters in strategy. But it's really the idea of putting those pieces together. A lot of it is learned in the company and on the job. How do you take those lessons and go forward. It's not like getting a master's in derivatives pricing and then being the best ribbon trader. Because you're better at math than anyone else. There are nuances here. There's a lot more gray. There's a feel that you have to develop on how to do corp. within an organization. Wmo roles coming up. I'm hoping to get a emanate. Business analysts and likely integration management role. Once we're able to kind of build out the plan or transformational type deal. Let's let's use these examples and the alaikum because different you like even integration as a group had really overload contacts so as young applicant coming in really striking to get into the field. I wanna come in and create this undeniable. A compelling reason why you'd want to recruit me bringme in right either. I would hire you tomorrow if you wanna be my aunt debbie. I understand know role playing the young guy. That honestly i think the approach that you take. Obviously you have to have some level of background in finance or strategy or or one of the major strategic initiatives that we're looking at in my company product and product roadmap is is a focus area so i could see someone with a product. Background has an idea of profitability of a product. Someone with a an f. Pena or a finance background that wants to learn more about strategy and wants to learn more about how the different departments i interact. I could see fitting into that role the key if you are someone young and you really wanna learn is more about. What do you know now and your resume will tell you that but the first couple of conversations have to be more about what you wanna learn. Where do you wanna go like. Why is it corp dove. That will get you some of that knowledge and some of those next steps in your career because it it really is something. I talked to someone from our organization recently. Said you know. I love the idea of strategy. What do you do to help build. That strategy and i said well strategy is really a team sport. The board is involved. The ceo is setting vision own. How do you set. You'll strategy is is always moving peace with the different contributors that you have so one of the things that i definitely looked for in someone who would want to join. The team is their ability to team an influence and interact a lot of folks. Who would come into that analyst type role i'm more looking for cultural fit and confidence and ability to to talk across different topics different teams even ones where they would be less knowledgeable to get a sense for how that person would interact with some of the senior leaders. Some ability or or history of interacting with different senior leaders is also important. You gotta take that feedback. You'd better be able to communicate them in the ways that there used to be confident in what you do know and present that show an eagerness to learn something new that's in the different fields of forbath and show either an ability to or a history of interacting with senior leadership. A former even a step further really knocked out of the bark. do i start going through your thank. As and qs i look annual report and extracts from the sort of strategic goals for the year i had a conversation with a young analysts a couple of weeks ago and he did. He went through the tag k. He looked at the last few acquisitions. He had really pointed questions to me as to why we did. The acquisition it. What was that strategy. How did we think about it. Presented some of the ideas of his company and what they had done. It emanate recently. So i think again if you show that eagerness and you take that extra step that is absolutely a way to not get out of. The park is to you in the middle of just trying to figure out his. You're a smart person who's driven. Who wants to help out on the team. You're able to kind of pressure test me a little bit on on the strategy and why that really is something unique that you can take an have that impact on someone if you go back to the last couple of jews last que and talk about what those things aren't. What are the threats that we're putting into our day in our our management discussions. How does influence it. Some of those very pointed questions really do make people stand out because it shows that they've taken the time to really want to be part of that emanate process not just art. Of course i gue- villages important but utilizing that as an approach to freeing the conversation. Ask you the tough questions off shop. What about some ideas. I'm doing this diligence. I'm studying beings than i'm even ask you questions about rationale on recent deals you've done. Should i be able to come at you as ideas of opportunities out there things like that or getting too far. I think it depends on the type of role. You're you're you're trying to slot in early career as an analyst. Probably not if if you're looking to come in as a manager or director those types of things will prove to be valuable being able to show that you understand what strategy was in holly company approaches things so if you're able to get a conversation with someone internally within product management or you have a connection with the company and you're able to talk through that you're able to bring that into an interview. I think that that is something that is extraordinary to be able to say. Hey have you thought about these different spaces. I definitely did some of that. Coming in at bp level to say here's an adjacency. Have you guys thought about that. Adjacency what are the processes that you're doing to screen those types of things that that is a an amazing step it does show you said the diligent side of it. It does show both the diligence and that ability to have that understanding of strategy into an adjacent market. That could be a huge home. Run again someone who's looking for. An analyst job shows a lot of initiative. There's probably a little bit of risk in doing it that early. If you don't have the steps to understand but as you get up to the vp level. You certainly should be thinking about those things and presenting them in an interview to the team say. Hey here's an idea i have. Can you explain to me if that would work in our team. And why or why. Not these roles time be pretty competitive. They do they do anything else to stick out ahead. Sometimes it's a little regionalized. I feel like a lot of the bay. Area's stuff is very much like a who's knows who the cooked community is it and there is some ocean coast to coast there are certainly groupings so within industries especially so at jam five of able to be folks from apm unity and and who are doing apple type transactions as a security player i was able to get into different security firms and meet their teams. I think that there are these kind of pods where you're facing similar problems. I think that is also a a thing that underlines that area interested and can be a little bit more targeted. So if you're coming from cybersecurity and you wanna be in cybersecurity start to build your brand across the different leaders in cybersecurity if you're in retail for an and you wanna get e commerce build out that ecommerce portfolio again. I think that it is really about that. Networking in this most recent job search i. I changed jobs in december. I want to say that. I applied to somewhere around forty five jobs through lincoln and various different online portals. I think i only got two interviews out of that process. I did networking where i was talking to people through through network that i knew and i think i got five or six interviews that way. Really taking the time to do the networking get through that original screen where screening your profile or your resume automatically is a piece that i would say would help anyone standout so just applying to a position online is probably not the best way to get a job always follow up with a phone call to somebody in the department that you would think would be the hiring manager or an email or or linked message because oftentimes those resumes are at least look at by those teams as opposed to the online portals. Where i may not eating get a copy of the resume because it screened at a better corp the or any of the vp's on the team or any of the senior leaders of the company. We did just get a question. Do you want to do that. Niagara the question. That was posed is how important is global. Emanates in an emanate strategy role and. I think that that really depends on the company in and their strategy so a us based company that is looking to expand in europe. You have to have some experience doing deals in europe and understanding what it is a. Us manufacturer that has a roll up strategy for other. Us manufacturing plants is very low. So i think it is. Both industry specific almost company's strategy specific. But i think that having international exposure and understanding the difference of doing a deal in europe versus asia pacific that in america is important or larger corporate development teams multinational companies. If you're looking to get on a team that's more of a multinational corporations. Having international exposure international understanding is probably of medium or high importance but again. I think that that's very industry specific or company specific to the integration person. So we talked about making a good impression with corporate development roles and imperious around the integration stuff because sometimes initially the corp the lead that eire's immigration we. I'm wondering what's your perception and automate judgments on who's the right fit hiring somebody and then gration side. I've had to hire a couples throughout my career. I've worked on the integration side too. I always felt like. I was trying to throw the ball with my left hand when i was on the integration side because you have to have a strong attention to detail there's got to be a really programmatic and buses oriented mind that is able to understand strategy. The more typical corp devils are our strategic minds that have an operational but prince and can learn operation versus the integration rule. Which is little bit of counterbalance that says. Here's all the problems that we will have how we with them and get to a level of detail that is really quite important to the overall process. What i look for in someone who's really going for that integration. Role is attention to detail. Someone who has some level of program experience understands what it means on the interdependencies of various different steps and stages key finding could influence someone else on a team and could be that kind of person in the middle of the process who can bring people together. And i think that's really important in any size organization as legal team. That might find a problem with an employment contract may not know the person in. Hr that is supposed to be dealing with all of the employment contracts or or the new employment offer. let's those interdependencies and having somebody who's able to understand and interact on. Both sides of that problem is really really important. I detest for the by coming through a couple of different conversations that say. Hey if we're we're in diligence or planning integration. How do you think about this type issue. Somebody who's really focused on a single function will go down all of the different things that would have to happen in a legal department in my example. Someone who's more on that transformational side will say well. Did we think about business person and key person on the dealer. They'd the ceo or the the leader of onic management. They'll start to think about what losing that person would mean to the overall characteristics of the deal or the tone and tenor of the employees. Start to think about how we can mitigate that through various different changes in the compensation structure. Maybe we would want to have a conversation with that person earlier because it might be an simon issue. All those types of of secondary are actually easy to test. Or if someone has that experience if you're hiring someone who's new integration. You can use a more standard project tight setup where you're talking about a generalized project where something goes wrong. And how do you think about the next steps. A senior integration leader you used and immigration example or due diligence finding example for more junior integration. Leader you talk about how projects some of that would come off and tell me about a time when you dealt with an issue that had more than one team that had to address it and then go through that example through the different cascades all the way down to the level of detail of how did you solve that problem also going to be able to really zoom in and zoom back out the all. The pieces started the exactly. And that's really the key role in the integration side is being able to zoom and have both the interesting capability to go down to a single step in your process all the way back up and say well how does this influence the overall value of the deal again as you get more senior in the integration side. They're able to do a little bit more of that or site and say okay. We've had this finding and they're really good juxtaposition to the deal team who's trying to push towards contract side there the side that says. Hey did we think about this. Did we want to move on something different. They're a good check and balance. And that's why i like having integration management within the element function. They really start to build out the thought process around how to unlock the value. We get to that point and you bert. Searching for your integration manager. What are their avenues. Decree that bellingham rushing on you. That sort of gives them the undenied interview upturning having any experience around either emanate or transformation program. You may not have to have done. emanate immigration. But if you're showing that you're a leader of the digital transformation of company or a major europe. Rollout or a cultural change management program in. Hr anything that has that kind of transformational idea behind it. Because ultimately what we're looking for someone who is detail oriented but has the ability to do change management in effective having that skill set is really unique because it is such a broad range of very detailed very process driven but also able to take that step back up and understand the overall vacations of each of those things so somebody who has that experience on a major transformation program will definitely stand out any other practical tips and advice or somebody that really wants to get into a group it really is and i said this early on and i think the integration rule kind of highlights. It's take some chances to take on work. That may not be in your job description around. Some of this is change. We've seen a ton of change over the last twenty years in industry as we've come to the club as different things have changed as different focus. Areas have changed. So there's always this constant ability to adapt and take on some of those new projects. I would definitely encourage anyone. Who's looking into 'em to find ways within their current roles to take on a a transformational or a operational project that is truly central to the company's strategy because that shows that they're tided to this idea of how to extend that strategy through everything else. The other thing i would love to say is anyone who's listening now or or on the podcasts. Don't hesitate to reach out. I think Two people already have only. Did i very active. Because i i believe in building the community so i am here as a resource for anyone and if you guys have any follow up questions at any point just shoot them to me on my thin and we can have a follow up conversation bellies. Been a one sale on s. You get my last question. I feel this industry. I noticed this job sourcing highly-inefficient all the stuff is unlinked. Then you have companies that may hire internally i or take a pass at that which makes a lot of sense when we talk about the strategic operational views. There's a sort of nature of organizations where they do a volume of deals and then it goes down and there's folks out there that like that on the other side that won a contract engagements and go to work independently on those opportunities. I'm just curious on your thoughts around that. Think there's an opportunity to create a solution to help make it more efficient in terms of connecting people. And i'll take my last week is example or i ought to at least three people looking for roles and other three people hiring and those dots don't connected had just because i'm a running three different business lines. Obviously there's inefficiency because there isn't a goto place to really and i think you brought a very important thing so a company whose only gonna do a few deals this year or their strategy is really focused on catching backups. The market they may prefer someone who's more of a outsource search front where you're going to pay a percentage of the deal and personnages gonna source the deal for you get close. There are trade-offs in ways that deals become more cyclical but that's where i do think corporate development as a function especially in the technology industry is becoming more stabilized. It's not. Let's get five deals done this year. We'll do not next year summer. That is industry specific and looking for that type of role that is able to be some more persistent but i also think that understanding the culture of a company is important. I've had experiences and some of the people. I've worked with very long experiences where we've been offered great roles at companies. Some of us have taken the only to have the job disappear when financing or the next funding round. Did come through and so. I think that some of the lessons that we have on diligence of other companies as you're taking jobs in the diligence and understanding what is that strategy you stepping into is really important because especially someone making that leak into corta. You wanna make sure that. There's kind of that persistence in deal. Flow and a internal focus in an internal strategy or. You can't get subbed out pretty quickly if the deal low or the deal strategy changes quickly on resolve this the general inefficiency. I hate to say that the you said the regionalized or the industry focused some of the way that it is solved in the marketplace is is the continued conversations and kind of the knowledge of who's in the space which is really hard for somebody who's trying to get in the sticks. That was one of the things that i struggled with. Getting my first corporate development role when you reached out is just a finance guy to someone they typically would have four or five people that worked at analysts or somebody that another leader of corp dance knows that is in transition for something new and exciting breaking in the inefficiency is is strong. it's building into that networks that gets you to eliminate some of the inefficiencies. But i do think that there is an inefficiency in some of this stuff because again the evidence light cycled a delight cycle. The deal flow is so variable that. There's a lot of churn in the community as it stands and solving some of that through an ma specific community would be interesting. I gotta go point. They're part of you. And i noticed that the tends to a lot easier to get exposure and spencer whose diary and maybe have been roads that way when you are part of a community i'd even seen it from fryer alumnis. I've interviewed or they've sent me. Thank you know that. Hey i ended up in this new role and this was a big thing that came up as a podcast with you. Science beside the community piece is there we got. That library of emanate plays right like a little technique thing and sort of chair symbols learned with the community which i think builds your profile professionally or that as well. Those are good tips in someone trying to come into the roles. I don't want them to think that. That is exclusionary right. So yes somebody even more experienced than me is going to write one of those books. But if you're somebody who has a sales background or a hr background take the time and actually look at it and see if there's an area of expertise you can add to that community that no one else can right. So you might understand employment law in in eastern europe and you can write a play both on the website or employment law eastern europe. Don't feel like you. Hostile have a vp title of a or or dads to be a contributor to that community. Because your knowledge in your current role is is valuable to the overall community. So take that step forward and contribute where where you can. I agree with a big time. What's the craziest thing you. It's a tough question. Because i think that. Ma in itself is someone inherently grazing. You have to have a certain personality where you're able to forget. The past at mentioned earlier. I told noah the craziest thing that ever happened to me was was when i was a consultant. I walked into the office at eight thirty in the morning. Boss pulled me into his office and said Get the twelve o'clock flight out of logan book. Fourteen nights at the saint francis. We don't know how long will be out there but just cancel any plans you have. We flew out on a one way ticket to san francisco and we worked basically nonstop for two weeks on a deal that closed. But i think that. That's just kind of the expectation around him in a. It's that level of flexibility because deals. Don't come up every day and when they do come up you have to be ready. And i think that whether that san francisco or i had a red eye dublin or couple of weeks in bulgaria. I think that that's the best part of them in a for me. It is not for everybody but that ability to learn something new or a new culture or be immersed in something for short period of time. Obviously pre covid was really exciting and. I think that that's the craziest. I is a lot of the lessons. Learned in focus gets accelerated during a project. And you get to learn so much so quickly about both your organization in another organization. That's why i love it. But there are definitely personal preferences and sacrifices that are made as a result of but funding citing and others. Yeah exactly thank you so much for the time really appreciate it or is it all in and again anyone who's listening don't hesitate to reach out to me then starting conversation. Here's the deal. Thank you for taking the time to explore the world of manet with our podcast. Please subscribe for more content conversations with industry leaders. He like our podcast. Please support us by leaving a five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by email. It's qissan i s o n at deal room. Dot net emanate science is sponsored by deal room it project management solution for mergers and acquisitions additional educational content is available on deal. Rooms blog at deal. Room dot net forward slash blah. Thank you again for listening to science. See you next time. Using opinions. Expressed on emanate science. Reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.
90. Identifying Risks in Software M&A
"Hello france this podcast is brought to you by dealed emanates coming back to void western hundreds of hours men as you know traffic and building our reporters. Do you want to make the process. More efficient fly-half bring us view. Dooms name management software to save time. Headaches and improved operations unionized valley. Best law at dot net deal. I'm ki sam patel. And you're listening to emanate science. We talk with deal professionals and learned valuable lessons from their experience. This podcast focuses on stories strategies. And what actually happened. During emanate deals. Welcome emini science live together. Companies is complicated and taking them. Apart is even more complicated. We take lessons from real practitioners and enable them education and technology podcast series. We interview leading practitioners to learn lessons from their experience. Learning proven techniques is key to optimize your practice. You're interested in learning more connect with us on her our events or access our educational resources at 'em a science dot com. I'm your host key patel ceo and founder of deal room. Today i'm here with elena sedillo nicola a corporate development executive with fifteen years of emanate and finance experience. Jay has led emanate teams that start ups to fortune. Five hundred she has set up new corporate development functions established relevant processes and structure elena as emanate deal experience and technology healthcare financial services in tech and infrastructure. She was previously at deutsche bank and j. p. morgan. Today we're gonna talk about how to identify potential risks during safra transactions. Elena if we can kick things off if you can just tell us a little bit about your background and experience shall be happy till as you mentioned. I started my career a chicken morgan. I started in their investment banking program. Where i did your typical investment banking role where i did a lot of salam our point than modeling and so on embarrassed leveraged finance group. After that i will worked for the office of the cfo or more good s and wealth management team where i did a lot of budgeting and forecasting of comparing against actual and also healthy. The company filed their ten ks other public. To that point. I got my mba like maybe at warton and went back to finance where spent ten years which bank so of those ten years. The first seven years. I wasn't structured finance the doing berry hairy deal so to speak where there would be derivatives in structured in or commodities physical underlying. Sometimes it would be all kinds of facts accounting and other issues that your client or bake solver on the last three years of by career butch bank. I was in bear corporate finance emanating so this was not actually bit team. Commerce clients as you as an investment banker doing name but this thorny banks internal corporate functions for deutsche itself doing deals which is a principal so bear. I did actions behalf of the which bay no primarily in the financial services in the infrastructure space. After that i moved to another role was also corporate enroll at company called khandan condiments abortion partner company. They provide tech enabled services and spun off from xerox a few years ago so when they spun off they actually have a corporate development function really at the time so it was still in the process of being set up my role there was to really come in and help that effort to get that corporate functions started yet. The deals the pipeline flowing setup the proper procedures all the infrastructure. The team everything. That's approval for everything has to be done to really get the corporate development effort the off the ground and then i would also just mentioned in my most recent role. I was in a much slow environment. It was a roll up a situation similar to a private equity model where you would have an investor group command. What up some capital and then focused on roll ups in the healthcare space. So that's my background burton. All sides of the deals from angles. There that's right both as a banker and corporate development principle as what is technical due diligence. What are the steps of it. I know our theme. Today is more specific on software. Deals sign terms of when. You're thinking about socks where deals instead of focusing on this five guests a couple of points. That are very important. When you're doing technical due diligence. That i i live focus on one a quoted and i'll explain a couple of points that are important about that and the other one is the cyber security with the coated. What is important is to focus on two aspects of it. And what i like to see is i when we do a quota and sometimes it can be done with internal resources often. The company may not have that kind of bandwidth or internal folks to do that. It might need to be backed by a third party. But when they're focusing on is to check on the quality of the quote am for any open source of issues so quality of the codes. It's self explanatory. You want to make sure that the quotas well written death. It's scalable especially if you're buying a company that's smaller then becoming that representing and the you're trying to then transition their product and their software code into much bigger context where you're gonna ask new clients at existing it's very important that the code scalable and can be leveraged without a potential for other uses that you can later. Add to realise synergies in. You wanna make sure it's well documented so people who might have the code have left able to trace the make changes you know how that works and then the second point that i mentioned is the open source check so usually it's done by the same types of folks often a third party where they run checks to make sure that none of the code or at least not very large portions of their code a source from open source resources and so for folks who are not familiar with the fives important to focus on that. This is because if you have open source which is things that are out there on the internet. Anyone can find it for free. Inc.'s the problem with that is that if you do incorporate that kind of code into yours than you might be required by law to provide your software out in the public's whatever you out with this and so then you may not be able to have clean ownership brides and potentially might have to share. You might be forced to share your code with everyone out there. Even the stop the value added of you designed just because about input that you took advantage so it's very important many cases you'll see some portions of it that are derived from open source. You just have to be very careful that it's not the very critical parts or perhaps some parts that are around the less important or you can bedroom. That's very important. And then i would just say that the other piece that i always look at is the technical team review the technical team. Your internal folks hopefully have some expertise with what they're looking for but you'll definitely want business sponsor and the it leaders to come out to look at the cold really test that out to make sure that it's working the way they want it. Everything's working out how they were expected to do. There's backup process. What is the service situation of the using cloud. How's that set up making sure that that's all very well understood. Really looking for the quality of the code. I liked the view on making sure things documented because i think that's really important that you have sort of collaborative type of code or somebody else can pick it up and utilize to know what's going on not spaghetti. Another was open source and checking for that. Which i think is really important. Because that's something come up in our own business where as we look to utilize open source technology. That's a big part of the consideration is order. We obligated to. We continue to take this technology of on it and we do make it. Something more of a proprietary are- responsible for contributing that back to this open source community and then that sort of led to like well. We're better off licensing the commercial product instead and just having clear licensing agreement and that way it's part of it it's interesting because i think software gets more complex and you'd have to look at it from these different views because it's not just one app anymore. Everything's a lot of little things working together. The last point was mentioned is very important to look at your cybersecurity setup and audible best out what the security gaps so in some cases you would actually have a team trying to hackensack target Testing these in cases you will just have other means to identify these cybersecurity gaps. This is a very important one situation where we had identified a vulnerability potential targets and that was one of the issues that ended up being very critical to diligence up. Land had to be provided for how to fix that something that the board and the senior leadership was very focused on so definitely has to be very carefully tech diligence in our company. We do an annual pen test and we have a sock to audit to those cover. The check boxes and we simply provide those reports. Are you looking for that first of all and then are you still doing your own pen. Test and assessment as well. Yes you do both. You'll ask for those kinds of things and you've gotta audits internal audits external audits that you might have been. That wouldn't be enough though like we would have still look at your setup at check use settings and things like people forget the change default baffert on some of the hardware and so on. There's definitely things that the technical team would luke and make sure that there is some gap that maybe people might have overlooked it. What people challenges have you seen that are specific to the software company workforce on people in addition to all of the standard things that you look at them. Hr people diligence when you talk about software specifically you have to understand your life cycle for on boarding developers and also sales people some of the things i've seen. In some cases it takes a really long time to quote on board a developer right and by boarding i don't mean just handing out thought of having them setup insists it's really more. How long do they take to get productive to get up to speed on fellow company rights code and that could take sometimes six months even more than a year where the life cycle or that learning cycle. I should say can do very long. The same thing is for salespeople with salespeople to learn the software learned that aspect of the product can take in some cases six months a year. Everyone seemed longer. You have to be very cognizant of what. Your current workforce and then making sure that the able to motivate them able to stay or you have a plant hire and then you have to build them. I'm in a very extended periods of time. As i mentioned beginning them set up being productive making sure that they're upgrading. The high level the software industries no stranger to acquiring foreign talent what gris come along with hiring employees who require visas. You'll see a few things so you'll see folk song visas various types of visas. You always have to check. What is the status. Is this person going to be impacted by it deals. Sometimes when you're doing an awesome deal where you buy no just the assets of the company will bend actually terminate the employee base. And then you will hire them a you company so that could cause issues for some people. Because you haven't done the paperwork where you may take some time to do the paperwork for that person to be transferred or the bees be adjusted. So that's something that has to be done well ahead of time. So then you're not inviting people losing their eligibility to stay in the country. The other point is some companies especially small companies can be lax about shaking work vapor. Some using the e-verify which is the online system but the government. Lets you shake. Someone's right to work in the united states. So that's something. I've seen some cases you have to poke around. Maybe do some random checks when you have to infants as if you have doubts about the strength of the choke you might up to do the checks yourself. The other point. I've seen which doesn't come up as much but every once in a while you'll see it popping up. Is that for certain kinds of visas. You'll have the employees are required to have a certain amount of years. Something their belt. In order to qualify for those types of work permits and then people will run these employees or classify them as being employed in a couple of different subsidiaries that once lawyers can debate pros and cons of that risks about. But that's something that i've seen as well. There has to be flagged than talk through germs risks. That can arise from that. That's interesting have you ever come across situation where you're doing. An asset deal and the outcome is potential. People aren't going to be able to get their visas renewed with this organization. I am had that happen. So we've usually have been able to figure that out or it hasn't been an opera benicia. There's been enough time to get those folk squared away. Nobody had to be. Let go for that reason. Okay so the tends to be passed to make that transition. It just might need time. You might need some time between signing him closing or building in the cushion those kinds of things and you other ride flies or things you look for when looking at the people side of these types of software deals overall be founders. Obviously very important one of the most important critical pieces of making sure that the founders of the management team is motivated excited to join your company and wants to continue contributing of dedicating their full efforts to that and then my dentist buying the right people and who are the critical people. So beyond the first layer of andre ceo maybe a couple of others who is the next level down and then maybe who is the next level down from back so ben who are the most important people that we need to make sure that they're automated so essentially looking at retention strategies them from compensation and other types of motivational strategies that you can think of so just focusing on about this is very important because of that knowledge base software clients. obviously key. and we'll talk about that later as well but in terms of the employees are golding that knowledge base about the code out. Works is very important. How do you like dig. In past the superficial. Yeah we're really excited to really know. Especially if i am the management team. And i'm going to get paid well from this transaction and of course i'm gonna be. Yeah for the facade up about being signed the deal. I'm curious to know if you have this approach to see it beneath that to get a real sense of this person. A flight risk. Are they really gonna stick around to your point. You can't tell it's hard to tell what somebody's motivation is. You don't know them very well and you don't get access to that. Second layer until way later a process for confidentiality reasons. It's hard but i think what you can do is set up proper incentives make it attractive enough and you know have the right kinds of incentives with metrics and targets that they're motivated stay around and have a guest over time those types of things who've post close incentive plan right. Let's talk about how to Tax issues affect deals or kind of tax issues affect deals so darwin. Actually one of my favorite topics i come from structured finance. Some facts was always a big deal. I know most people. There is can delays over when they hear about taxes but can actually be quite important Where and sometimes dealbreakers even more can be nearly dealbreakers so the kinds of things. I've seen for example you have a corporation. It's a kind of corporation that is a through. It's called the mess. Corporation owner just reports the income from it on their tax return. They have to be set up in a very very specific. lanner documents. A wild before that can be with the irs otherwise your whole setup endanger a. You may not even know that you haven't done the right way. So what i've seen in some fans of founder thinking. They're starting mom-and-pop shop and they're not sure they think they're gonna get that dictate they do filings themselves online and then twenty years later. It's huge company. you know. Remember a lot of revenue a lot of employees. And then you'll only find out when you're doing and you actually didn't file about de after documentation of in the right order and your whole setup is completely at risk instead of s corporation. Where you have your income flooring through to you and you're not paying taxes on the corporate level you could be in danger of being deemed a- corporation like corporation where you would actually have to pay taxes on that level and also you could have. You're doing a special kind of transaction where you might be doing a stock deal but wanna treat it as an acid deal for pacific refer to it as a thirty eight. H dan exchange. It cannot be done if you didn't file your s. corporation documents in the right way so what can happen in the practical senses you either not allowed to trade tax purposes. Three thirty edge election is completely not available. Which can change the economic significantly to you as a buyer or the founder can be deemed to be owing all these taxes going back. Let's say fifteen twenty years. They've all the company which could be depending on what their revenue can be. Tens of millions of dollars could be could be even more than that so huge issue and very difficult to so. I also find that. Sometimes i've seen cash flows between related entities where equal pay management fees from the left hand. Right hand when you're in a small environment. It could be fine. But when you're dealing with a large corporation acquiring them this of thing will be scrutinized by the irs. You have to be mcguire. Very cognizant that this could be it in could be then reversed and then hasn't acquire if you're acquiring the assets of the company especially if you're acquiring stock but even acquiring the assets of the company these liabilities can follow your route. So you definitely want to make sure that that's mitigated various. And then i would just mentioned very briefly at seen. A lot of state and local tax issues with software companies especially. It's an interesting one because you might be selling software so client and they're different states and haven't filed your local income tax returns or maybe All states that you were supposed to again that could be over years and years and years some significant money as well. I'm earning law notes and talk to her counted about a couple of thoughts. You're actually miami me a conversation. I had with the ceo earlier this week where they're growing the mid sized company size in as doing business in different states some states require you to pay taxes on software sale and in this sort of whole wayfair judgment has really thrown things off with that tax liability and that now they have states that come back and say hey we want to see all the transactions you've done with the state and they're going back for those taxes you have this pretty significant recourse that they can demand the taxes on all these invoices that you've transacted with companies in their state and then you can't go back to clients they. Hey five years ago that's right and and we'll come back and again thinking as an acquire. This is something will follow you around. Definitely i know as a stock purchase even as an asset purchase you deem to be buying all of the assets sort substantially all of the assets. They will follow you around. So it's something you have to understand and just whatever the statue of limitations usually seven years six years something like that and just add up those taxes that they haven't paid and agrout what that amount ism potentially. That's something you have to be. Cognizant that's potentially could be the risk you're taking without state and that's how do you mitigate this because you gave some really good examples of these taxes nations that are hidden and that could potentially surfaces some really big Abilities how do you end up dealing with that. The escort person didn't have it in their identified. A look if this is a potential brisk here then what you do it depends on very different mixes depending on the today show. But the example i gave the s corporation in some cases you can actually go to the irs and ask for forgiveness essentially. So there's a program that these kinds of things was an honest mistake and you didn't do it on purpose. You treated yourself so you never meant to with any other way. They will actually give you a grain to amnesty. So that's something that can be done and the other thing is there's this whole industry that developed the last few years about axe insurance for emanate deals specifically. So they're folks that will underwrite the steps of risks so for example this escort situation. Your solution is you're going to go to the irs and you're going to identify this program and you're going to file for the sandwich Probably in six months. You will get your amnesty. That's what your tax counsel is telling you. But there's risk not one hundred percent that they'll get a to you. You can actually buy tax insurance from certain providers that will underwrite this type of risk. Malleable tax rates in some cases can be very useful because these useful fail if someone says this is a big dollar number and we can make an astro for it. Let's say but your extra would have to be so large that you couldn't be workable knows cases. You can take advantage of some of the insurance products and for state and local taxes. No you can do something similar or you usually those much smaller and you can set up escrow so that let's say for a couple of years. Nothing happens then. Escrow releases to seller observe. Good ideas on how to overcome that. Have you seen like a specific example. When he saw a tax issues severely impact the outcome of a deal it was one example where founder dynasty trust like a family trusts. The company was actually help through a trust one of the founders were actually three founders of one of them was a non us citizen at one time and founders out of the picture. Now have nothing to company but when we'll set up and so we had a situation where that person's not being Had to that actually boston posttax setup. You didn't have treated the right way so again. Similar situation to where you can have the company's tax structure completely in backed up by some technical issue. When wasn't set up the right way we could get fixed and there was. You could unwind some big trusts and bill steps to mitigate that Well i don't think i've ever done but they weren't problems so always fascinating subject. Who i need emanate team to be that subject matter experts. Identify those risks. So usually you have someone who is knowledgeable about federal taxes and state and local taxes in the larger company. It would probably be your head of stocks on their team. Who would come about knowledge. They would usually have the expertise at least to check the federal that up as well as state and local in many cases though because the tax department is slower. just doesn't have enough capacity. That would be part of your financial due diligence so you will be hiring a third party to do your financial diligence. School your warnings and so on and then part of back you can. Negotiate have attacks module as far as those kinds of things could be addressed by one of the big accounting firms. Whoever's doing financial diligence bake definitely dig into that. Sometimes dan by your legal team so as part of your neagle to diligence. These kinds of things come up as well to combination of lawyers looking at it as well as finance slash stocks folks whether internal external missions the x. expert. They're usually a combination varies on copy. Set up the resources. You can get moss cases without these have some external components. Because it's rare that you have all these state local experts of the right expertise to find on those kinds of things. What's important understand about a software. Companies client base. This kind of question goes directly to your financial rationale and how valuable is companies is to you so you will have to understand if you have especially concentrated crime base than how concentrated is and also how sticky those software quiets anti even though software tends to be relatively sticky because of takes a lot of time and effort to implement a new system new software for your company especially in the clydes not set however they can be various degrees of attachment to the founder and the current management team. Are those guys address cleaning than you might have climbed as well so. It's something that you wanna diligence in. Usually you like to do it for any concentrated big clients via client kohl's either rights before signing or maybe at some point late and diligence. You might have client. Kohl's where you set up a time to with gordon clients and you'd talk to them about what's their relationship with the company. How happy are they. What are the issues. Just try to gauge. How engaged they are and how likely to continue with without products and with new a company. You give me examples of questions you would ask them. You would set up a time. You would have a relationship. Manager called them actually whoever the relationship manager or the salesperson but morally talks to them. Explain the situation explain. This is in the context of emanate. Deal in we're looking to get some diligence don trying to understand because they're an important client and then the kinds of questions you would ask is just. How long have you been with the company confirming kind of the things that you found in diligence. Our engaged do you feel that your users with this product are you looking to continue using the product a you like from the scale from one to ten. How happy you are with this product other teachers that are missing so those kinds of things to get idea their engagement a lot of times. You can tell by tone as well so even before you ask anything or or while you asking. It's really important to in. You can tell what the dynamic is relationship manager and the client and also easy to get on the phone and smiled fells you volumes as well for the good and bad now. These are staged interviews. What about some back door access to due diligence or other angles to get a sense of what the com- obviously there's produce and things like that limited to what you can do depending on what stage during the deal process. You may still be highly confidential phase. You can dig around them. Ask people you know and employees at the company can be tricky or just trying to figure out what people think about their product and what their general reputation is useful to try to do that. It's hard to do without giving it away in ecosystem. We go to the same trade conferences and everybody knows each other. Can i go but other vendors and be like a what do you think of that company or were you hear about them. Maybe not exactly a customer but other partners in the ecosystem absolutely and you'll also get a lot of intel from your business team. Whoever's in the prompt lines doing the selling operating business they will often go to those kind of conferences bell. No bell hear rumors. They'll go to drinks and they'll know stuff wealth often. You'll hear things like that from those bills on the folks that are really useful to talk too long. They are losing deals on time to not competitor. Then they'll probably something you could potentially be interested in or look at target. What about In the customer contract itself there there any particular things to look for. Customer contracts number one thing and not specific to software is any kind of triggers that are emanating related or change of control related. So this is something. That's very important software. Because most companies that are implementing a system like very big effort very big expenditure for them so they tend to put a lot of those close. And so i wanna make sure that if there are any kind of change of control where the customer has the right to good santer. Get out. I want to understand what those out. You also have situations. And i've seen where customers. Some of the larger customers have even rights to buy a copy of the code on change of control. So this is something that can be very tricky for deal. If you're buying your company your target in your code is really cheap of the company and so if you have different versions of the code flying around the customers may be having licences perpetual licenses on it. You have to make sure that you fully understand up to the shows. What type of issues have you seen in software deals. In addition to the code audit than the clear title in the open source. That i mentioned i would also say that the example that are mentioned about people selling different versions of the code to others that may be floating out. There is definitely one that i would take look up. In some cases it can prevent an omani deal all together in one situation. We were negotiating to buy a company. It turned out that they sold copies of this code to others for that was going to work. And then in that case you might be able to instead of angel still that capability for your business. Maybe it's better to do a licensing arrangement instead. That could deal real in them angel but it could also bring potentially even a better alternative through license interesting because even our business purse like white labeling the product in that circumstance is obviously. There are some variables around it. Because is it just a pretty tight knit. Deal that it's here's a single version who's managing it and so forth so i can see some complexities around that in terms of who's got rights to what and you actually have some proprietary i or or maybe not. Yeah do you have but others have copies of. You don't necessarily have control over how tight those licensing agreements those kind of things. Exactly how do you look at it as a risk because the somebody else could come to market with the same kind of solution but it depends on what the licensing deal is but potentially if you're not buying the whole company maybe you're doing a car you just buying that particular asset but there could be related codes versions of the code that the company keeps whoever the sellers and then tries to launch products with that other version of the code. Someone different but not different enough for you and that causes you to compete against that. Which actually or they could. Maybe they're not doing it now. But then they have a potential to develop a product. That's similar to yours or similar enough to your. I will keep tied rain on ip. Make sure it's clear in terms of who's got access and rights to why and understand that when you are doing deals with other companies would may be a potential issue for somebody is looking at your business down the road. What are some other aspects of due. Diligence that come up a lot in the software emany so they other thing i would also note is accounting. This is something that has been in process while there's a new or relatively new. It's several years old accounting standard cold. Sem six zero six and that is a different way. The state your revenue may companies have already shifted to it over time. There's been some extensions because of covid for smaller companies and so on so you just have to make sure that somebody's giving your financial especially at a very early stage when you're just browsing or you're just having the initial conversation that you are making sure that they are using the six six or if they're not then you know how to restate that. This could be very material changes. I've seen most of the dog disappear from the year that you're forecasting and under the black hole because it's been swallowed up by the prior years and so all of a sudden you're looking at a much smaller company even though nothing really changed the company's still the same product but the way it's accounted for has changed so you shouldn't really change it's just the county however the multiples are different now and it can be different exercise. The forecast different exercise to sell it. You're looking at a much small. That's something that people can underestimate the impact of seemingly it's just an accounting change but visually it can have a big impact for people. Counting practices is really interesting. Didn't think about the That's another one of those topics that sounds drive but it's it can be fascinating too because it can have such a big outside back from deals through this interview you've made it apparent that much harder to do. He suffered deals. With all these little components around it and thinking of a scenario and i more frequently and i think this is just the direction. The world is turning to go towards software market. Jason software is in the world. And i'm seeing more and more nontraditional manufacturing company for example that are acquiring soffer companies and to make sense the strategic objective is very sensible. I'm curious on your thoughts around. What advice would you give to. One of those. Traditional manufacturing companies. That's doing their first acquisition of software in terms of getting them to really think about what the unique nuances that. They should be thinking about doing that. Deal i think the most important thing is managing expectations of your internal stakeholders and educating them. About software emanate process and very importantly softer multiples. So a lot of companies in your example of manufacturing or perhaps some more stable not as high growth businesses. Maybe not as at margin they tend to not trade nearly as high the multiples as software compete with. And so it's causing sticker shock when you go for provos folks are saying you want to pay. How much for this. Where trading base. You wanna pay that and making members work making it a creative commu challenging the not situation. So i think it's doing not work with your emanate strategy with your strategy with your executive decision makers to prepare them for that agenda of making sure that you're clear you have a mandate you have your clear strategy and you understand that. If you're emanate strategy includes saucer purchases than people understand what that means. They understand that. Those kinds of companies can be some heavy multiples and there's twain to be sticker shock as a result of the economics are different so they need to understand that when he mentioned strategy should this organization really is a specific strategy to go after the software company or if they start seeing some things. I'm just curious what what do you think about the thinking behind. I don't think you need a specific software or technology strategy. It's be part of me on monday. Strategist usually what happens is that you have a business line. That having jason say's that let's say this particular product can be helped. You can enter a higher girl segment you can expenditure. Different marketplace may be picking up higher margins other attractive characteristics may be geographic reach. Sohn's it's really just part of your overall strategy that you have to be really clear and then once you have a strategy set up than you have to make a list of targets that fit the criteria than you have to educate folks and be known these types of companies that you're going after so there are no surprises later on when you haven't done. All that work had been done diligence and you come for pro bowl center so it's not a surprise your pay a lot of money for those companies are not used to those kinds of things that can be tough. It's something that takes time to educate them to understand the value proposition. I think there's a lot of organizations that are making these moves essentially disrupt their own business organization to really stay relevant with the fast changing times so that sort of tends to be part of it as well and then once they commit to doing that saying hey we gotta make these changes. We're gonna make this investments and get past some of the economical differences in the transaction itself. Going through that process or the or anything going through even diligence and things that i know you've highlighted some specifics. On how you look at the ip in the the code audits and things like that anything else that you think would be unique for this company to really consider. Prep for outside of what they would do the traditional approach of doing diligence. Those are probably the main things other than these. They would be typical things. You would always look up in diligence. Which is your hr topics of compensation and benefit plans and financial diligence. And making sure your quality of earnings is there so all of the typical things you would look at. Those are the main points that i would highlight. Has a specific diligence. Work stream for software is another component would be interesting would be looking ad culture side between two unique industries and how that may abide or not combine good point. So that's i mean that's usually something you would look at in every deal and definitely a big one which acknowledgee where you would have often. You're buying small company that has been operating very well as a smaller company. And they've been able to do things. Let's say often much more agile way. They're able to feed up and just run around without during watch overhead approvals them. Yeah you're getting a bigger company to swallow them up and then you might have approvals that have to be done certain things a sense. Definitely something you want to test out. I don't think that's a huge deal. Usually i haven't seen deals failing for that reason it's usually more the heart banks that i mentioned a cold the facts they accounting the other stuff cultural issues. I haven't seen those fail but it's something definitely went understanding. It's a little bit hard to test. This from is seeing people don't fail. Deals for culture integration. People might. But i think it's important to keep right to make those folks very welcome gives them that attention as they join. So that's going to be part of your on boarding transition. Hr transition as well just getting them even set up the systems and helping them navigate the stuff around even how to sign up for benefits and other things like that but really helps was the craziest thing you've seen it. Yes so. I'll give you an example. I've seen tons sounds. Okay thanks this public example that talk about it a little bit more. This was a divestiture that idea relatively significant one way signed a deal and several days afterwards. The buyer of zeal was one of their directors was accused of fraud by department of justice. We had situation. Potentially the impact was we would have some of our purchase price that they were gonna pass be tainted by a person who is an ownership stake in the company so that was the thing that was really crazy literally days after signing the deal. And it's been all in the news a lot. It definitely wasn't a saga dramatic on that. Well that was crazy stories. You got a lot of your head just donating. Yeah this one. I mean this is the old name public ones. But i can really talk about many others. That are more confidential in nature. Awesome curious because i know you have the banking in background as well and that tends to lend to all kinds of interesting views in which you see in the deals. Yeah had all kinds of things like people deal sligtly literally at the altar because they thought there would be some benefits to the gave. All kinds of siamese. Just part of the nature of the day is drama. Things happen you overcome. There's always some excitement for sure. Thank you so much for your time. I really appreciate you sharing your experience with us today. Sure nice chatting with you. thanks for having me on. Take us the deal. Thank you for taking the time to explore the world of manet with our podcast. Please subscribe for more content conversations with industry leaders. He likes podcast. Please support us leaving five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by email. It's qissan k. i s. o. n. At deal room. Dot net emanate science is sponsored by deal room it project management solution for mergers and acquisitions additional educational content is available on deal rooms blog at deal room dot net forward slash blocked. Thank you for listening. To emanate science. See you next time. Using opinions. expressed on emanate science. Reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.
M&A at Scale
"I'm Ki, Patel and you're listening to mea science. Where we talk with deal professionals and learned valuable lessons from their experience. This podcast focuses on stories strategies and what actually happened during emanate deals. I today I'm here with Carlos Desta Vice President of corporate development at Procedo. Prior Roles Carlos. Include head of Emanate Dentsu Aegis director at Verizon and verizon ventures, as well as other private Equity Wall Street positions. He's an investment banking and private equity trained executive with over fifteen years of experience, executing and leading strategic initiatives. Today. We're GONNA talk about aligning leadership for greater deal success. How're you doing today? Carlos? Elia. Doing. Wonderful Baby. We could just kick off with a brief explanation on your current role at Presidio. Sure thing. Thanks for having me sell the best like the describe what the present is. I'm responsible for the executing on against the inorganic growth strategy for Brazilian. So anything that is so origination negotiation execution. Anybody integration all deals, Armar my responsibility. So you run them A. Exactly What advice could you give to entrepreneurs that are transitioning to a role in a larger company post acquisition? Right so so many the dents. Nebraska and so there's there's certain a best practices I don't pretend to have a list of in. If you do this, you're gonNA be Great It's just the just some things that the enterpreneurs that gaming to larger company had in mind and dead resulted in the successful transaction. So one of them I would say do do your research you're deleting diligence on the choir as part of the diligence I know acquire point you to other portfolio companies. Can Talk to other CEO's that went to the same same process. That's super helpful. But I would say you know extend that sample to the ones that they didn't point you to I'm not saying go behind their backs but try to find out what the story is behind each position and yet comfort. The the way to preneurs treated when they coming to a larger company is something that aligns with what looking for. And then I think the second step is really comes to the core of what we're discussing kissing. We're were you and I were talking about, does it make sense to talk about? A topic like this in. The core of the success I think is the salary, the interpreter connecting with the deal sponsor either the person that he she gonNa reporting to the person that is driving the deal floored, and this is of particular interest in and when we talk about middle market where. The guys are going to be running the business are most of the Times the guys are selling the business. So, if you think about that relationship with team the seller, the main silence say the jeopardy Moore. In. The deal sponsor is that there's a certain personality that these guys have to have to have that debt insures the deal go smoothly and I think that as both have to be kind of bridge builders in the sense that they're coming from different backgrounds in the entrepreneur is very concerned about not breaking what he has culture in in sponsor wants to it. All has other in a bigger larger objectives due to solve for and not everything's GonNa go. As as knows. So they have to be kind of people that understand that there's GonNa be issues that they can be flexible sink ages both ways, right? So. When when the enterpreneurs is not a bridge builder, get a big pay upfront right for their business and then every time that. The sponsor of the company, the acquired trying to come up with integration points you know the I think the the British bill that will say, okay, I'll take the good with the bad bringing some disciplined in. Terms of the process of. The laws in I think the guy is not a bridge bill. Quickly default into US versus them kind of mentality zillow he comes the big guy and. They're putting all their `eurocracy on US I. think that's to be appointed. ENTERPRENEUR has to be mature enough to understand that. They're gonNA come with some processes but why don't you? Why don't you take? What's the good with the bad I mean they're they're definitely stages on the life of the company that in order to row scale, you need these processes. So why don't you have why not have a? Discussion that is open with the deal stalls about how to do this A. Synergistic way. You're really hitting on some interesting points with this because a lot of times we always get fixated on the dollar figure how much of that transaction happen for a I. Got some competing bidders for my business and you know we sort of had this onset look that you're just going to sell to the person offering the highest amount and the most favorable terms and. So, forth, everything. You just mentioned his all beyond in a pass that because now we're putting this consideration about what's his transition going to look like and like you mentioned that founder owner doesn't want to destroy his company and see things get broke up and then he's got to think about this role in the organization and what that transition is. GonNa look like. Curious to know checking references like, Hey, what what other companies that they've they sold to and what's experience been like for for the CEO Win When you start thinking about this and you start thinking about when you mentioned having that connection with the deal sponsor because that's sort of helping to to facilitate that plan in how we're going to put the companies together was he doesn't want to break it, and the other person wants to preserve an execute on his value drivers and the best pieces they created. Win Win Win you start really putting those pieces together. So. If I'm the diligence will start a even before you engage a banker. In even gauge of a good banker, they will help you make the distinction with gene I'm GONNA call it. Culture is the most abused Lord our but it is. The is are how how different companies go? About their own, particularly as the banker will help you. This group usually does this piddly does that or if they have a particularly sophisticated integration process or not so that should be happening even before you hire bankers, you know networking with people would would be. A good way to go about schooling Dan and team what do sellers salt to you? Know you probably be semi industry talked to them other experiences before signed we're talking about this. Oh, yeah, absolutely. Now, and it's not a good segue to the sort of. How to get to know the deal sponsored any in define find that you know British bill there are a person that acts with A. Deep level of empathy and that that happens way before l. ally in courtship. But I think those are dinners meetings maybe go for drink and stuff like that. But I think where it really the rubber meets the road when there's a process that that we put place identity that was very much geared towards coming, coming up degration plan that is designed by both parties. So and this is a little bit before ally, but it really testifies once you're in full diligence, you sort of consider the integration as another work stream of diligence have your people doing hr diligence finance legal then integration is one of them because you have a deliverable. At the end, which is integration plan. And integration plans running parallel with all the diligence that's happening absolutely. Yes. Yes. So you you saw nate leading to greater of the for the for the deal that won't be the deal sponsor someone that it works for the sponsor, for example. In, the buyers organization that is can really navigate well within the ranks to accompany the idea is this person is going to be responsible for. Collecting findings from all the other work streams in. Heaven accessibility to look at those and say, this is affecting aggression. This way maybe should integrate should not integrate hr sell fast maybe we should delay. Finance Integration or maybe we should do this really fast and in that should be. That should be done very early in the process because in my mind how you integrate and how you design the the deal, the payments, how structure the deal are intimately connected. So he'll integrate fast great but if you want to manage some of the payments within our now gear now can interfere on your ability to fully integrate it because you know with the are now just have to identify a perimeter. Of the company you're acquiring. So you start blending costs in realizing costing her duties. You know you can do that with cross charges but it it becomes very messy in very sometimes ages. Early on you basically want to use overall strategy to help guide the direction of integration in that approach, you're gonNA take. Correct in and even go one step further. We were talking about competitive processes sometimes better process especially if you are strategic and your against the equity, but for example. You'll be forced into putting a lot of money up front and not putting much destruction the deal if you think you need structure on the deal that comes directly. From the, you're the work that you've done on the integration. Balanced. Between you know changing your deal structured to win the bid versus probably hindering your ability to grade the way you thought would. That meade will not words you shouldn't compromise your integration strategy because of yoga competitive and it's a it's a it's a tough one to to solve FM the leading to. Digging my hills because if you didn't your work right and knows that you know the the way you capture integration if catcher valleys in the integration process so You've met mine win the the deal detriment of actually capturing the valley the deal. Well prevent that I. mean that's it's almost sounds like you need immigration guy to be negotiating but the. Point in place. So that's why we can get into this as well. We had a lot of debate about was the profiled is leading to greater. because. Many people think well, it's just a project manager, right? No. Is is a very good project manager, but also someone that can navigate and has. Is In power to navigate the whole management structure in. Their feet down when when things go in the ways that are not bland. It is it is a complicated one, but it's being none other that you know you want to. Assign a lot of. Power. The the leading to greater. Yeah. Here she will be working very closely with me negotiating. Neil. That's a reference the sort of the way it should be. It is I mean even in your seminar yesterday people were talking about integration how important it is and we should treat it as as. A winning part of study has being recor by. Yeah. I think it's a trend I've seen with a lot of the cereal acquires where integration just gets pushed up further and further and a lot of people counter and say Oh we don't want to waste the resources for not having certainty that the deal is going to get done or signed ally. Value Perspective of having that person there to actually validate the value drivers the deal and make sure that they're committing to delivering on it. Correct. In other thing, one other point that is related to all this integration work is end to end. This is only from a purely from the perspective. A lot of the items that are discussed Diligence Hauer GonNa, you know integrated ourselves for. The go to market how you know. Soon get integrate hr it legal what have you I? Think they get discussed but don't ask a -sarily end up in a purchase agreement. So. What we try to do is come up with. Integration plan is actually a document, some sort of. A lot of understanding between the two parties which I it's it's not binding. But at least we we make sure that we discussed all the points and there's no sort of after the fact after he closed ball, you said this, you said that and and also circles back to testing go relationship between the interpreter and the sponsor you gotTa be discussing retouching stuff right how you take all of their health insurance plans and putting another one. So the way both enterpreneur end deal sponsor react to those stuff two topics. It's a very good way for this personality billions both ways to occur at right it's not a dinner is not having A. Dinner With Deals sponsor everything's going to ensure that everything's GonNa. Fine and Rosie is. You test the future relationship by discussing the topics. Well, tell me about the death of this because this comes before y. and you're essentially outlining an integration plan and you mentioned some of the things but I mean, obviously, he's not going to be to the detail. Comprehensive is actual executable plan. What does that look like like what level of detail the actually if it should be should be It should be very detailed timelines when we're doing watch. Yeah. So it's We have a sign L., A. Y.. Why would anybody in their right mind? Do that? Why would you spend the time and resources if? Each transcends the right start before the lie. But it goes. So if you. Lie as a milestone, you sign it, you continue to doing that the diligence work and integration work. So he goes beyond the other why I got you. So you'll start it and sort of start framing things prior to ally jointly with Seo Entrepreneur and sort of develop this clear post picture of what's going to happen. But then you continually hit rate correct that sounds very agile to me I like it. Sounds very you. So I wanna I, WanNa, go back entrepreneur. You know this guy we talked about him in doing his homework and diligence to understand what's going to be happening post closed and we talk about even jointly developing that integration plus get a little bit more details into what are some of the struggles that you can expect to have for that person to have and have to be able to just to. Yeah. So I'll tell you no credit for this. But I I do have some answers and they became via sort of Post Martin discussions that I had with some of the enterpreneurs after the close the deal in things the starting degrade. Specifically there's two guys that you know became. Interpreters, Leah finally, companies, and then subsequently became friends. So near Sharma from digi and stabilize from a new explorer guys that are very close in got opportunity to sit down with them and talk about integration and what what worked, what didn't work. Very, sort of candidate kind of way. And the both bills are very consistent with these guys. In this sort of two interviews I did with him amongst I think they were probably ten to having that I did. But these were the ones that I thought brought him more of the impact. So they were two main points I think you know the while while we're going through the motions of the deal in planning integration everybody's discussing. How we can grow together and what's the what's the larger vision close the deal? You know the leading to greater still there providing that sort of like continually to do you know the larger role here. But what the enterpreneurs? Used to is to beat the sort of professional management right? Someone that is not entrepreneur is someone who finance hr for example, that start either at eighty, the company interacting with the company saying. Well what numbers can we what your budget? And then like all the biggest, The big vision in the Senate is an. Professional Management Will look at it and say that's great. But your number so that that Shaw of process process process is not a selling bad. I. Think is just that the acquirer is so far down the road of putting efficiency into everything that that person is looking for that extra dollars efficiency right and it's very focused on the numbers only. So finance is is one that I think is going to be a big shock. And then to Puerto should be prepared. The other one is hr when you're trying to integrate anything that has to be acid. is also shocked you know when you're going to transition people. And it touches every employee I think those are the big ones then but but in the big concept is. Coming from a company that is fast agile everything's very quickly to the cultural shock of having professional management. You know just get trying to get something out of it. You know. I would hate it. How You know I love my freedom I I love running the show but then after transition I got changed my beautiful CEO title to Vp you know your organization or whatever it may be, and then I got an answer to you or whatever it is. How do you sell that all and that's that's interesting. So Again in these interviews, what transpired was people could have. Different. So that's that's the point You know he's tested in his. Bridge Builder Abilities you could just turn round and say. So my company and I don't want to deal with. You know big bad guy in identifying plays in start badmouthing. The acquire I think that's that's a really bad strategy they. I've seen. Walking to this process knowing. This, with the right expectations, they know that's coming. Then take the bat. They will talk to professional management and make sure that you extract from that what they're bringing, which is bringing efficiencies to the process. You always gonNA defend your your culture. Absolutely you do that, but you don't go to the point where you complete turnaround in star poisoning relationship. And then that's why you need to guys to be this deep sense of empathy because that is going to be very tempting to do that, and if both of them one the deal to to work, they have to fight and find a way to you know. You can take the good with the bag. You sold your company you got a lot of money. So you know. Want. To continue doing this, let's do an unpredictable and he's not going to be the same way they were done in the past is going to be jointly. Now you have a partner now. Okay. So you're you're transparent and you're really upfront. You're not hiding anything saying, Hey, look there are some trade offs in a light Lice GonNa. Not Be as pretty or we're GONNA accommodate the best we can but you know it's it's not going to be exactly the same and you're going to have some more rules to play by but you're getting a fat check out this so don't too much there's there's more than that. So let that in that integration let of understanding right you also put numbers in there and if there's a structure in the deal where you have an upside to the to the seller Enterpreneur, you both look at those numbers invalidate those numbers that's helped span the the. Cassidy you coming to say, Hey, we think we can do you know three million of joint opportunities in the first year five year you kate with that look this is what it does to your. To your now, and we went through that that that process with their fire companies and in. Get, get get on the room and just look at the drivers of the synergies from both sides and then we validate or say, no, this is too aggressive or no. This is actually not aggressive enough. We can sell this. So it's it. It transcends just. introspects because there's bad things coming up. So really we're talking about approaching goals as a partnership. Instead of my company and our it's our company. Exactly. And economic upside is all that both are valid. What what's the lesson he learned from rising that he carried with you throughout your career Oh man. So I was is before a dozen years and there's just there's not I mean he Kim possibly get one One lesson out of it. So you know the the sheer size of it to the companies is just so. Overwhelming right in other to move the needle on earnings per share, you have to do such big deals and and also you know I I helped Dan capital users might be my boss stand up drives adventures so. That's another whole level of the learnings there. If you ever have a seminar about corporate venture capital loves participates Work that one. Yeah you are so much with it a stylish, the whole. Governance process that there wasn't one for small investments in day Donald the needle. So everybody. Every quarter someone trying to kill your. Your program, it's a great experience, but I think if I had to go back in the second, what's the Big One and I think for me the big one was. About humility to be honest and it comes from the side join two, thousand four. So I saw the whole rise of the. Wireless in detriment of the wireline operations sometimes. So you had no DSL line was selling doubling the number of lines and all of a sudden you went down fast Internet was on the case. From a political standpoint the wireless guys were on the rise right and everything they touch was gold everything was go so. They rose to the higher echelons of Bryson, and they were successful when they're doing wireless deals in Don. Successful deals in humility point comes when I mean these people ascent to power and then they try to. You know in the media space, for example, insignificant and we all know what happened. So. It's a it's a lesson of humility that you know. Yeah everything touch was gold backing the day every time that he's going to look at a new deal you start from scratch you don't capitalize on. The success I think that's The biggest lesson the them. Learn what not to do. which is crazy learning I. Agree. I. Agree. The I know I've heard some related interesting stories are on that too. But we we'll say that for another interview as well. Let's talk about leveraging employees to ensure deal success. Right. So I I think we're talking about here is. When we're GONNA diligence situation, they have to go get someone in HR to due diligence and Bardem virtual team. Yeah. So they think it's cool at first when you hit him up like, Oh, I get involved in this this secret project and then they find out what it entails and they hate you later for it. Easy it's never so what I think can. Mice, we can make things a little. Easier for them is if you project manage them, you don't need provide them templates, make life easier engage them early obviously, but they don't have a template for what they're looking for or what what is the how they have the spit out there diligence with boy just provided to them. Have some draft some because they really don't have time and you're to be chasing them and if you. Don't partner with them. It's The going to be done what right and you know you have another deal coming up it's going to be even you know that that's going to dictate how the relationship's GonNa go forward. So what I try to be be their friend. And trying to make life easier. That's I. Mean Yeah. You bribing them with the templates. Okay I think we both know though like especially in diligence, a lot of the risks you identify requires significant amount of out of the box thinking. You'RE NOT GONNA see stopping and Chuck List, and it's just the check is a good starting point. You know that sort of make sure you cover the obvious and the doomsday tomorrow type stuff by the real things I mean, it really takes that sort of. In the shower moments like wait a minute order about this, how how do you? Teach people, sort of get them up to speed to start thinking about the emanate deal in that way and devout that sort of expectation. It's also a point of pride for them that they don't want to hear from you. Oh, you might want to look into that. Point to something in their area of expertise. So yeah. So I think two suggestions there. They did not sure fire solutions, but I think it's it's probably something that might WanNa try one eight started specializing people inside the functions. So you'll have someone in inside hr that is very well versed anime has done a ton of times. So had very good insights know what to look for right away and things that are not in the checklist as you said, something in. In finance that suggests number one suggested number two for me would be again back to the leading to greater. This is almost like you know why it's my right hand in the diligence process is this person? The right now has the right level of. Will be able to look at the early findings from from the extremes and raise flies as two things that could go wrong. To that fact, what we used to do was to we have a the middle of diligence will have either. Calls every two days three days on maybe a weekly calls where all extremes will and it's it's a bit the taking a lot of time. But what is interesting about this? You leave the line open and what some of my say in the. HR. Work Stream. My effect in have called dependencies on wave integration and finance and even legal. So they discuss right there and then while the dependencies are and I know you can do this virtually unknown people used to do that on teams and in call Alvin down dependencies, but it can do that. But I thought that sort of all hands cau- as where things really the issues bubble up. And you start an US sort of brain power of everybody. To come up with, the unknowns. I think it could mitigate those. That's interesting. So Enabling better collaboration could help facilitate that. So it's sort of Kinda rubs off. The sort of you got, you're out of box thinking and you start putting the pieces together and start connecting dots there on right. Now that exactly exactly the colder benzes and if you can I think you could add I know some of the platforms that are already have that capability of found something here. Let me tag that person and make sure that that person looks into this effects there were extreme and then you need to discuss live. That's a real problem on I heard there's this amazing tool called deal room that does that. Very thing you should. Check it out I. Think it's going be the best thing. Absolutely it is. So I think we touched on this in terms of like win companies should start thinking about integration and the deal. Keep get right to that little point of it. Is it. You know we we've been Noah's before ally but like how early do really start thinking about integration like you have that I meaning and say, Hey, do the safeway even like each other I and do we start looking at some of these sort of a sense of what the company expectations are with the person wants for the business is at around that point we start thinking like, okay. We kind of get a sense of that or do we start painting that picture of immigration before that even? I think it's even before I start usually started with a deal sponsor inside my own organization and say, and we look at the. Start signing from that. Is it very cold. Calculation because if it's a CAL scale Galician but I'm together right away, it is far from the core is bringing different capability. So. The further way guests from the core I think the pirated probability that you're going to do something that is more customized on integration rather than just let the companies together, which is what he doing buying life for like scale play. So that's the kind of discussion. So we have our opinion at least I from the biocide. Hollow. We should integrate this guy man. Yeah. So that we have an opinion. So and while the first conversations with with the sellers is, okay. How are we going to conquer the world and? You know, usually the balls right they talked about business or how they're gonNA get these clients and all that, and then it is a natural segue from that that cocaine home can do that. We're going to be tied to the head. You'RE GONNA do sort of more. Isolated or or customized extract starts narrowly start very is waiting for awhile. Wow, that's really good to know what we talked about like developing this sort of joint integration plan and go to market. That's the benefits of actually doing that. The NFL yeah this. Is. The same thing as your integration plan and go to market? Out I think. Very. Tangible. Benefit is I think what? I mentioned before you know discussions that don't get captured anywhere else in the. It IT'LL BE THERE Even if it's not they it, it's like a shake hands out of sorts but it's there. It's being discussed and this is why we agreed so. Will think twice between before you know change changing opinions changing their minds. So it was a documenting the stuff and second is I think that bit of a bidirectional diligence. It's the two principal discussing. Tough issues that's what you see people through caller. bidirectional diligence. Yeah it's all those two and I think thirdly more. So those two are strategic. Technically on that integration plan, you have a timelines for each one of the of the work streams, and that's helpful for people to you know especially project manager against. When things get done when you move platforms when you? Not Real estate that that kind of stuff is just A. Blueprint for. That helps with coordination getting a smooth transition. Yeah exactly. The forces you to. Newark. which is Great. Can you tell me the specific process? Of The doing of the distant dragon plan. Yet so Stop by again it's died mobilization starts early by what I taught you that me talking to the false horrigan integrated this. Conversation we. Go to sponsor and say, can you nominate can eliminate your need integrator? To, be honest I think the the profile be someone like, Ceelo. Right. Understand operations understand finance on the the business. So right there. Dan. dispersants nominated. Die To the hypnotise s to you know the whole process in. Even like you know. Face to face meetings with the with sellers integrator come that at that point integrator is has the pen on the Lincolnshire. And so I started designing it with it's really. It's a it's a powerpoint or word what I would want to their section so Okay, what main principal? So you start with soda of. Burma Stamina source of sorts of saying well, you know these these companies are coming together because. One plus one five in the way the way they want to do that. So that's the sort of main goal, and then under eight, you have different sections right? You'RE GONNA have a go to market session and then leadership is leaving staying in functional and then functionally breakdown between all the you know the away the. Finance HR legal IB tack what have you in each one of those will be a fool sash section on. Power. With number of people that are involved Dade school when it's there's there's timelines, designer time line, and then the the leading greater will be project managing all those timelines even beyond the deal site right because those things bills timelines integration as you guys know, there's Six months some things, eighteen months to years depending on how fast of all the pace of integration. I think that's it and then well. What's important that once you have a good draft good first draft and this is probably an after l. ally or but not very, not too much after. The first week of their assigned the ally you should not with the salaries and say this is. This is integration plan. This is how we're thinking about things we're going to be exiting on this together. So do something sure that you are. You know everybody's validating what's what's in here? So you have try again afternoon going through all the. Sections of the degration of all of the work streams and the initial plan and get feedback from the seller. How should do this? I'll do this all the time. The seller is push back on. You know how fast they wanted to get integrated for the reasons that we discussed before right while House Economic Michael, Journal that. And that's understandable and it's been done where we'll we'll will pace this. Right let's. Let's do you know six months in any year depending on how the sponsors thinking Can't you? Again though. Not, while necessarily, so experiences that I had is that. Leaves the horticulture again, the culture is so different it's A. Much younger people on the target. Did they communicate very differently than than than the acquire at that point in terms of the tolls that of us? Internally. It's very. Very. Tough Shock. So we need. Intentionally. Badly no, these kids need to shaken up a little bit. No, no, no no, we're. We're buying them because they have something special we don't. GotTa respect that. Now I understand that view like you're you don't want to destroy the very thing that's the value what you're purchasing I understand that. So I'm wondering if it's More the timeframe standpoint of approach standpoint. I see. I mean, there's a lot to that you're going to play with right and that's when you know folks like me or you. We cannot do that. We of find that it's really the principal the principal I think that's Or to to sponsor kind of relationship and. If they'll come up with and say, we know what we could do this differently because listen three months. Yeah. So. What one thing I didn't hear when you talk me through the integration plan is clear emphasis on the value drivers. Like where does that sit and how do you keep everybody sort of is on the the real ball that we're trying to capture. So this is part of the. Integration Process Spanish remember I told you we sit down with disgust the size of the bride's with them with salaries and we sit down and say there's five million revenue first year ten and validate them. What what what end up ends up happening is that that's how the sponsor you're going to be validated in terms of compensation. And that's how the enterpreneurs going to be evaluated uncompensated. Becomes really. The they're they're drunk budget comes out of those discussions. Well, I I'm saying what about during integration? When like the head of it the head of sales is like, why are we doing this deal? So easy when there's no alignment within within this the buyer. Well, you got the deal done and you're going through integration process and you have these functional leads typically broken down functionally, and they sort of got a list of things they need to do, and that list gets bigger is sort of break it down and I get their teams to execute on it, and it becomes his massive checks box check boxing activity. And then sort of that whole vision of what the deal gets lost and that that's where I'm I'm wondering is if we were buying the company for the customers, how do we drive that? This is our value driver. This is all in. This is what we need to do is to make sure that we deliver on the value that we want to retain from these customers. So for. transgender correctly from the bias respective. Then talking about the guy, the guy that look you know is looking at this and. I get it on top. You know why the company is getting fired. You see the value of it and you built out the value drivers in your investment thesis. But how do you get your functional leased? Even a no that and sort of. Had that message continue I mean M B I. I mean I would assume that there's a lot of value and having that level of the limet. The everybody clearly knows why were buying this company in the value want extract out of it. Does you know. I'm assuming about his boarding here, and if if there's any disagreement darling form through the process, right so all the work streams together detat guy the HR person if they see something that they don't agree with, they should raise their hands by that's part of the process they are fully briefed on why we doing that know the strategic Russian out way way before our diligence say or there's a kickoff call before starting say this deal is come in in. Leases, now you guys are GonNa be due diligence on. This does a there's a buy in at that level. You should ask him if their compensation is to those I don't think. It's not I just feel like the general purpose to get lost. Now, this is the frequent thing I hear when I speak to people and integration side where we sort of lose the why we're fighting this deal. Is. I. Think we'll. Try to inform everybody up front why doing and. Why would diligence on a kickoff call? Now that's not to say that, let's say the CTO Monday disagree with the deal I don't think we should do this because of why and that's a valid point and what we will do is I'll bubble up his concerns or her concerns to the executive sponsor. So you have the day to day sponsor deal we're talking about, but ultimately this goes up to. The head of the vision or a CEO Right. So we we bubble up that because there's something that. Should the did it doesn't smell? Should be that point what mom indications? Yeah I I, get I just didn't know there's like a sort of a silver bullet approach just to really get that high level met around that sort of a deal thesis that Really Continues Organization because it seems like it strong in the beginning. But then later on, you're talking about the guys are on that integration checklists execution side, they sort of lose that purpose meaning. Yeah Yeah I don't think there's a silver bullet need to. It's a process of constant demand. The disputations have made the stakeholders come up to you in the Middle Diligence am what found this this still WanNa make this do something four with this. Like you gotTa Make Mission Statement for the deal and recited every meeting. That'd be interesting less time with. Your next deal he could. Be. Funny. So what what's a? What's a common mistake you seen made an manet that you believe could be easily fixed avoided? Asked. I'm with a cliche one but over and over it's a, it's Dan clean down the integration because many people wants to see the deal done. In, do not pay enough attention to how to think about integration or how to deliver good integration. I think probably didn't ask you a question because. You that last part of easily fixed it avoided. That's not. The kind of you know just getting I. I liked your approach about the joint go to market integration plan. I mean that seems pretty easy. It's just Agar integration lead and seal the company announced gather and really know before we finalize terms what this is going to look like A. Discussion that seems pretty easy. He'll don't do it. and. Also, if I may those something here. Maybe. This is more pronounced on sort of middle market where you're so close to the sellers are the guys that run the business. In, A. Particular Service Industry because you're you're by people and their relationships should asked us if you're buying IB, maybe it's last. Another conversation I don't know but what you mean? Yeah. We'll have to take that part in a real deal strategy session. I like even buying spectrum was completely different. Well. What's The craziest thing you've seen in? The craziest thing you've seen them in A. Man. All just tried to. Okay so is a deal got. So it was it was a deal that we looking into. Where I was when we're looking into, it was brought by a banker. In we're probably two weeks into diligence. A sector is a very strategic to us we're going to. Good chances they were gonNA, deal. In Very early still haven't done background checks anything when David my attorney comes to my office than he has a payment, his antics I did you see this? In with a simple Google search at that point, a lot of stuff came about the CEO of the company elected in his activities. During college were. Like into an break breaking bad. If you know what I mean, and that's I mean people make mistakes but I think massive miscalculation that the crazy part of this is that. The banker didn't see this coming in. It was it was a fairly good. Middle Market Bank. Reputation didn't see a problem of this coming and so. After I had a conversation with attorney I, call the bank with sort of the wgn to my face and the answer was like all we were going to tell you about it. So it was just. It's ridiculous. It's in this favorite to the seller who? Have you know but the CEO in some sort of bar capacity that someone else run the company realized value you went to A broader process in the market with with that Asia I'm sure we were not the only ones that had a problem. In you probably hindered the ability to salvage company later on. Transacted or not. But for me, it's a classic example of bad advice from bankers. Yeah. Got To be up front and transparent than don't put too much lipstick on the pig. Carlos thank you very much very time today Georgia our conversation, and learn a lot. Now, this is great. Thank you for taking the time to explore the world of emanate with our podcast. Please subscribe for more content conversations with industry leaders he like our PODCAST, please support us by leaving a five star review and sharing it I enjoy hearing feedback and connecting with our listeners. You can reach me by my email. It's Qissan K. I S. O. N.. Deal Room Dot net. Emanate Science is sponsored by Dell Room it project management solution for mergers and acquisitions. Additional educational content is available on deal rooms blog at deal room dot net forward slash blah. Thank you again for listening to science. See you next time.
112. Conducting M&A without a Dedicated Team
"As a regular listeners know people leadership and culture issues can make or break a deal. That's why i'm excited to be joining the. Hr emanate tables thirty annual conference. I'll be there alongside. Emanate giants like ken. Freeman or mercy. Oh quest diagnostics. marquette of best to go ventures sally larsen of l. p. l. financial. This year's conference is optimized for virtual attendants is the best way to learn practical hands on tips and techniques for managing the people leadership and cultural issues visit. Ma science dot com slash hr to learn more and get a discount code exclusively for emini listeners. Again that's science dot com slash. Hr i'm ki. Som- tell and you're listening to emanate science where we talk with deal professionals and learned valuable lessons from their experience. This podcast focuses on stories strategies. What actually happened during emanate deals. Walk them that. Many science live we're leading emanate practitioners. Share lessons learned from their experience. When you use proven techniques and emanate more values created interested in keeping up with the latest from emanate science visit an a science dot com and subscribe to a newsletter again. That's a science dot com. I'm your host patel. Ceo and founder of science. And deal room joining me. Today is alexi. Canary co founder and ceo of digital airstrike. This'll airstrike provides roi driven social media marketing. Ai messaging reputation management lead response customer engagement and digital marketing technology solutions for over five thousand businesses. Say we're gonna talk about how to execute successful transactions without a dedicated team. Are you doing alexi and great. How are you excited to have this interview with you. We kick things off with a little bit about your background. Years ago and started with start about seattle and i was in the original founding executives jeans. Yes you didn't do any neighbor. We did take that copy to seventy five million and harar in akers so that was my respraying attack really before that i was i worked for baseball team but then i was recruited specifically to join it. Company called dealer track out of new york because they wanted by how in marketing but also running best relations. They have very specific underneath plants. It was to do a number of acquisitions and also continue down that path of acquisitions as well as certainly developing own psychology. That was part of a team and it was an internal team. We did think eleven actions there and just a couple of years very active company. Much fast new yorkers which i love. I think that's the stage for me to really have an appetite and certainly learn especially when you're doing it for probably company. There's no room for error. Learn everything by the book but we miss pretty quickly. so that was my deepest emanates grants for. I hope i'll order strike in the last eleven years since mergers or acquisitions. That's really interesting. How your initial exposure avenue was through the ireland's yes marketing imprint achieved and one of the things. I wanted to talk about celebrating with the people. Everyone says that remember a they can make rate an acquisition. Get those folks on board. It's really understand with working. It really is the first asset that i look at. Who is the team. What's culture that was my role. Emma nissan. It was certainly look at how we position and acquisition randy and presented to the also. How do i embrace them. How would one switcher one chain. That was my original background. It served me well understanding that out of the gate us. Great ran lot of conversation about people and culture. Yeah to get into. How do you effectively do deals without a dedicated team. It's actually to manage more work stress. Mine team at works with me on that has no regular jobs are real exhausted but as a real advantage i saw a little bit of dealer track. We don't had emanate team. I was a member of the team. But i had my other day-to-day marketing. I are responsibilities. Sometimes when there's a dedicated emanate room insurance as well as working with the banker they get your imprint as maybe someone in the company day bet and float the idea they wanna make sure product line on its own forces and the data dates humans can at the acquisition not really involved in it and so basically your maybe doing a little bit of due diligence. But it's not your baby and then suddenly it's don't laugh and i think that's why a lot of large companies it's hates them so loved monetize for his. That emanate kimes gigs. The hand off your expansion. go find your next. Y'all and you're just given this adopted baby your family already. You're gonna raise. I think it's just slower when there is that dedicated team and it's event to ask him to run with versus art robes primarily myself our coo and our cfo and our head of product strategy. We're in it from the beginning for the beginning that we're gonna do this deal. It is pregnant with it during the negotiations day site houses. Acid fourteen minutes to execute wants to deal. Dodd already be so much further ahead. We are in the weeds. No the financial no the products. We know people. Because you've been the one so looking at the deal doesn't mean there were how but i think in very successful and the time of deal transaction then monetize impact so in realize the benefits would interesting is the way you contrast between having dedicated. Mit and having a dedicated emanate team. Particularly you emphasized ownership when don't have a dedicated team. You had this view that you're going to own this deal from the very beginning all the way throughout and i think that lures to some of the people culture things that he started off with and then also this end to end view in that whole process. Looks like all the way through where you mentioned. Sometimes you have dedicated team and becomes a bit of a hand off. That's right it. Only let me see i to clean up your job. Is the company gets your the finance arts or maybe they asked the operation side but the fact that we're all in it from the beginning were all kind of betting Looking at what's out there and really agreeing back. We're gonna do this. We're gonna own out of the gate of women deals even then. Sometimes that nature disappointed yell a of brian with that internal team and not reveal happens is now i just think it's not his further ahead faster because really in it as art of our full corporate strategy. Not just a one of those guys win over there. What are they gonna jump on our row nets or the only a it when you're doing some due diligence but you don't have the picture rightly so right you're working. How many deals. Because like i've been a part of one of those bigger teams and i was given like my assis. Hey lexi this is might happens. Might not and then. You'd think it's not gonna happen and we'd six months later. It's actually give it to you. I've seen both sides and ask nick rosa company. I'm sure we're going to have resources that. I wanted to other sort of not dedicated. We have is. I've been pretty open with vapors so we've got some boats looking to go. Judy on emanate. Or you're looking for transaction yourself bankers time and i'm always thinking of them more like real estate agents. I might not be in the market right now to buy a house but if you find a good deal and you're out there talking about and then you want to bring its knee. I'll pay you part that y'all i'm not working because i think that also limits your options in terms of their lens and they're connected to the great way to look at it especially for the sourcing activity i take it. In addition to having a network of the bankers you're still looking at some of the proprietary deals and building relationships with other. Ceo's that could be potential targets. Yes i do percents to across my desk today. Ever bruce so we've been pretty open even your show. Thank you as are looking at this. And you're thinking hey where he goes digital stripped as i spoke to conferences. I'm handles broadcast and just run out there. If you bet -nology do research or buy online. That helps them see us face. Maybe talk to us and there will be something your partnership or an option deal whether it's our down the road so we haven't votes that i in fact one of her recent deals we were from a banker he knew we were in the space a couple years fire at that time. It didn't made sense for us. They didn't end up doing deal. One of the founders remember us and was no longer working with the banker and just shall we just kept in touch and we maybe the timing better for both of us and we elevate like dating. Yeah absolutely why did you sign. You're getting married to our rest. There's all sorts of ways that deals comes. I'm very open about a lot of knowledge. Love our development t but if we can get point faster if there's really an asset that couldn't be better it's relationship with people allows us to meeting. Certainly builder unchecked but then get something else. That's very cohesive and works best strategy. I'm all about it and i. it's interesting. I don't think companies throw that out there. There's some secretive about it. I'm not running around telling everybody talking to you. I don't want to get it a bitty more with somebody. I do think that when you opened to talk about. Yes it's true. Sounds like you're taking the right approach. Where you're at the events conferences networking. You're keep an open about it with the board members. What about internally do product folks get engaged and no. They may help us. Bridge a road map or something like that. They do a great rushing yards. Some pretty excited about it so advice yet company even for art. I'm always like no promises. Someone on the bronx side. That's gonna take our secret. All i'm always like hey suicide ours. They're doing back one of our other transactions across my desk. Twiddle hold vendor outreach to somebody saying hey do you want to buy your client. I just check out their website. And i it over to this pretty cool no idea cycles company but as you start looking at them. Why didn't you wrote you literally how we got one. Didn't they get happen overnight just reopened especially when people come to you. When you're certain size like we are actually now eight hundred and now the row certain is he told me that they humblest guest to resell their six audits. I'm like i didn't build this company meeting bill. This company just sell your arrived just as you haven't invested in the bills team that i talking but whenever i hear that song pitching us that way i would still take paul but obviously distribution challenge or they need something it might have not yet really not a way to breach market so that's also trigger. Look exactly that here to help your sales. I want to build this company. But you wanted to each other and that's been really successful. Approach with some of the founders. That media aren't so early. Stage their corn still a big. Everything's gonna line but by a six years and they're still wearing the hat their hr finance Doing all things and they've gotten away. Maybe what we got at sutton beginning. And i'm almost thinking that lega farmers you want to come in and take some table now earn out more money with us. But you're part of our larger structured so you benefit from dinner. Sales marketing counts yields reputation. But then you get that payday once. All get a bigger heyday down the road again. I'm very open with everybody. I tell them that's how it is. I talk about my story in what i've done so for the right company that you'd exciting option for them because they're just not ready to fully sell out there's never memorable they want but they're also a little over wound wearing all the hats which your thought process on strategy or are you looking at these deals for the people the product the marquee assess that and figure out what's most warranty. I actually like to find out early on what's broken. I kind of liked to find a diamond in the rough. He's very critical in a collaborative way. Where i'm not beating anybody yet. Also seem certain investors do that but really what is that problem that stops you going alone. Or limited your growth and he'd very much a partner in a beat founder and ceo or investor. Sometimes it's best that stuff or something then just claret a little bit together because again. It has to be shared vision. You don't want sell it. The budget opping upturned diligent. So i start there. That's also a really good way. See any or with these humans. You're gonna work. It's most of the time it's not just during the deal. There's an earn now. A joined your company dot will work with them and lightens short work with you or that aren't going to be as open as i'd like them to be. That's a very good exercise to get no humans that you're gonna be working with. They're gonna do. And then what is their culture like. Sometimes that's part of the problem. Maybe haven't focused on culture. Making their benefits aren't great any turnover. Those things visible. Because i always look at it once together. It's not us versus them. What she knew you'll it is the knee and it's not always the digital airstrike is on the radio. I'm looking for those little nuggets. That they can bring to the table wa and she. We build a break and great company. Integrate but i think starting uh special questions out of the gate. What is another night counting faces. What stop to go from here this. Why is river where it should be. Why don't you have more clients. I kinda liked to get in there. Because i've got story or an experience that i can relate. I'm not young anymore. So i've got definitely an exprienced somewhere that i could not commiserate with been relates. You're looking for opportunities to create value. That's right and honestly when there is a problem that helps us that. That's the upside. And i think that's what. I also remind the perfect public for that. What is the cypress. How do we find a way to work together in some of those things but always get that very oneplus when he was three but four or five. What is that like. And i also don't ever do it with me personally. Our team have not been answered. It lived in this business. They know is going on and what they need some. What's the better position our this oregon a little interactive eric. We're gonna walk through the deal. I cycle you're familiar with and i want to understand from you. Like see is iranian. This deal life cycle without a dedicated and eighteen. So i want to understand. I are getting people involved at what times throughout this life cycle and how utilizing the resources that you have starting from the very beginning. Were you have some good conversations of the company. It seems interesting. But you're still like you mentioned you're assessing the people culture you probably want to get understanding of their customers. So maybe you can walk me through or does that timeline look like and to bring in internally and as you move into diligence sharon i start with our cfo. Eight great guy stephen stay. I'm like hey page one sign. Nda always just an answer process. They're not sometimes inspection but there's an nda that goes where cfo nevertheless tracks. The copies looks running. We're he's got frasier and he knows what we're looking for. It always starts there and then the conversation. It really depends on who we're talking to his approach me it. Ceo to senior founder. getting. I'm not going to relegate that down with something more junior i do do you wanna get. They are just get a sense of them. But i'm not gonna lengthy call might be fifteen twenty minutes for time. You're thinking usually would probably win. The next steps is usually whether co and our products as. We just want to see what they're doing. And maybe there is this data. It's not born. It was issue. But where are we going further. I just like to see what they're going to show us. And that's what about you today. Launching a full sales pitch snowed today. I'm a fully loan out. Ira like what the bank reprints you gather. What are they not saying like. What's on your budget this off. You're not talking about at all. Is that was kind of a red flag. Is that you don learn a lot about them sometimes spoke. Aw thing guys have of meeting and then we start to about with the team. Want when you start to run the numbers. It doesn't usually happen right away. You put them on a spreadsheet and you get a sense of urgency from now there's desperation neither fallen too much like something's wrong here. Doing their own thing. We actually liked to track them for press releases and let me say online social. How active are you even. Let's say if you're acted it shows they're still in it or are they. Each quarterly checked out so last time he posted social three years ago. We tried it in investing in a little bit of bow. That you've got an ounce them and you have to know the decision grits going lot of time talking to somebody that just joined the team but we definitely have our our. Ceo's great about but online sleuth and we check our. We look at different mediums looking at a lincoln profile. How many on the when you gonna let you see people. That aren't there. Just now people touted at you can see how much turnover there as well so we tried to go probably quiet do our our little. I don't know investigative journalism said At least monthly. We're talking team about what's next. What are we is there something and then just seeing if there's any urgency asteroid we're in essentially plenary diligence. You got your cfo. On-deck your chief operating officer product strategy person getting the initial feel for the deals see where it will fit in your ecosystem really observing how this companies presenting themselves looking for some of the red flags. Are they skipping. Some of these well known metrics that they should be comfortable talking about doing your own diligence online checking out some the link then understanding what the the people ecosystem looks like there. There's any major issues. Churn out the glass door and things like that and then your internal folks are contributing. You're getting this level of comparability. And where do you get to the point where it's like. Hey we want to put an offer. What does that look like. You're gonna make sure that were for the stage that we're in right now unless it's an amazing deal. River was crazy of network like immoral. We're not rushing spirit on very well. So i mean press of we actually think companies uniprix interested in its early stage and their process network have Finds martians we would stink. Mitch rebounder maybe there is some light or should we could you but we're not ready yet. There's not one size fits on and how process the charming. But would you like to keep an eye on it. You liked to you aware and stay in touch. I would resemble mice yet barrel checking quarterly by inches. So it's not uncommon talking company over a couple orders before we might get serious and say okay. Let's talk about what did you look site. Usually not enough information. I have a one hour talk with the with the founder and ceo and depending on where they're at about tiny what might make sense fresher. They may not be familiar with it in may not be somalia and what. We're we're part of the deal is equity in our company. They need to know about us and tell her we're going to now. Who a lot about us. So you sit outside which do and you thought about as their founder to you more of an exit yourself to allow you diluted by having to take on more investment that's your nuts potential option whereas of art. Can we get where we wanna go. Scattered he gives you as a company being on their external financing. Lets you spreadsheet. And give it to the i know a lot of firms. Bc drop-dead. i. This is what we're seeing is the metrics. But not just what you do and this is our why. But the numbers on a spreadsheet. Let's show you a couple scenarios from you if you're gonna come in you're gonna stay part of the combining. How could you fresh it. If there's an earn how could stop like promise but we're going to have an exit one day. Let's run some numbers and then let them around with a spreadsheet and a little different but that is very helpful and now done a number of them some of these tools that we found that wirtz. You have in place so again. Why can you do this for executives. Because of that. Because we've seen how this goes and not always reveal the same way but it's not be to the people that are involved that are winning business data. Let you know where you go next. And sometimes you've done deals in a couple months megan's you diligence free quickly. We don it is not that hand off from the dedicated emanate team has to defined time in your calendar and then we start that our society now again. I've been one of those dead teams and when they've got so many deals they're working. They do all their stuff. Then they try to turn it over the trout chief and almost the whole dot and show again which stands everything so armee diligence. Usually people find surprising gets ruined him. Thirty forty budgets. i never formats. We've already done a lot of the results. All right so as we near getting to offer i i'm key wanna make sure that you're comfortable that you got the right time for to do the deal that things are going to be. They're going to get the focus that they need and things like that. You're not busy with another ille- just finished other part is get into sharing information about your company. We really open up and start sharing with them. Inner workings of your organizations so they get understanding what they're getting into with organizations like with the upside potential is then at this point you start discussing general terms and even provide sort of a model in terms of your view of what the opportunity looks like and be able to really be transparent about that. That's interesting it's like good steps to add in focuses. More on getting alignment than what a typical here and then it would be so. There's no big surprise and then that's interesting that circulates invested in remember. I think the though because the worst than you get an ally and then spend diligence. None of things fall apart. Because you're not assessments. Something was something else on either side. I had that happened without any rather on the front end. And maybe not right. And that's why i think he not rental. It also takes the fear factor out every single owner investors. You never know deal. You're gonna take us the right just as you don't have your split transaction really going away. So there is that your. I think they're watching. It's like you said. I one ask me anything done in india. Let's go through some of the things that's really important and it's been interesting even times when the battery decided to walk away or the timing wasn't right or we could do a deal. We've learned hush. He's not that hurt your date with some investors the way some postal process. It's just like him. Payment might time to spend a little bit. it's getting. I'm not going to get offended. I don't want them to get either reason. Absolutely and it like going through these steps it allows you to be really comfortable from both sides so when you do get a letter in tat. It's not an surprised things in their everybody's pretty aware of what's going to be there. You go through internally get the approval check marks. From whoever he moved into confirmatory diligence. Does that go down. The list of that is like i warned him again to deal. Unlike gotta ask these things. Don't read out and because again. I think you have that report. It also alleviates some of the aints when it got really up mona then writing got a really sure. Some things sometimes. It's about them. When you thought specials more informally at it doesn't matter to they're like lean obligated to Some of like. How do we not know there wasn't a lawsuit there. You talked about things like that. So sometimes those things up but that you just back at media whereas in the front when the action of the real deal. That may have had some pause and we've got a comparison. Wait to be like. Oh pretty much smokeless. Okay we're expecting that are well. That is a one getting rich. All the character of the individuals and again i thought were these folks long term. For that reason we may stop discussion. It's good to have that baseline is formally ask questions get to know the those dinner now. It's and then once you really get into your paper you outlined don't you have to disclose. It is just very interesting to see things change or not. You don't have a dedicated corporate. Have person that you can just put in charge of this. Can you explain to me. Your involvement during confirmatory diligence and looking to redefining conquer. Quite a bit idea. But ray executive they said and they know that the boxes they're going to have to check we'll set up. A different companies are not office or they are. they're going to. We know what to look for me though. Always esperance leisure that were supplying documents. I just wanna see down our risk british standard rations from deal. We ask i want that. Founders iota sign on. I wanna know yet. Provided the data rambler never had that. That's what i look at. I really looked at that. Simple word dot doc of nick. I want to dance. End up cutting on what that tells need. I sent her to go. Leonard data railway. Though this down why are they delayed and getting that. We spent a lot of night. Air traffic is looking at a top level but then once our teens healthy something product is digging looking at their documentation on technology check staffer whatever vendor contracts and berry curious as to how they structured vendor contracts. There's there's a lot of. I are certain legs. I would ask me. But i'm not one of the it's swede dividing offer on that and then once there is an issue. That's what i'm like. Okay look at this together so your team has regular day jobs on top of working on deals. How do you remember now. You think this is the it's the work hard play hard. This deal doesn't happen learn something. It's almost like ongoing executive education. You learn about how somebody else. Structured a vendor contract like. That's a great idea. Needs or well look at their benefit. Plan you never thought of doing that. Lets new you pick that nothing. We're stealing information. But you're always learning. I think more than when you're doing that and expose needs how other business search rerun if your diligence rohingya conference okay. What are we gonna learn an afternoon. We didn't go there and mortar virtual retired when you search really understand whether companies were. That's where our team rousselot allies. Well and even if a deal doesn't get done always got something that we can use again. We're not stealing information. But it's more of a process or an idea or wow. I never thought that we can leverage something in a way accompanied it. So there's some learning. I think it's actually very unprosecuted gene or somebody will get excited. I get asked by all of our members of the one hundred and sixty five. And we'll didn't company mediums. Like why don't we get into their acquisition anything. We don't like to slows everything but it is fun in baltimore the team and again. I think it's because it's not just this thing often an island like a stump. Works emanate group. That's doing something behind closed doors. We really make it our coach. When you're going through confirmatory diligence. Do you start thinking about integration day. We start thinking about it before that. You really do strives about even the votes that we may bring in more revenue for die like a director of technology off manager. We're pretty open look to live. This is maybe there's a partnership roberson nivo. We want them to be thinking about down. But we're we're just trying to the other pieces fit. Sometimes though it's a grab and you you know how to work it so you buy it sometimes. It's not good. You're thinking oh wow. They've got this one bolt on thing. That would really work well with our platform. You don't have to build it and you get in and no matter. What question you ashley. Because methods easier weiner reveal what you just really realize. They had some big fail to tell you about the actions down the road. We've had that out. We didn't necessarily china back dish in need it but a couple months later man came in handy because some partner change the road or something the shipyard and they already had you for back door to integrate with somebody that needed defense step. I love always eating purchase like that. It was good surprises a bad surprises. It's always felt that. I think we have had more bad for sure again. We're so involved in the kneeling saying this. But i usually. You're right but it's okay. It's thought we'd have to be right about that. But sometimes something they just literally didn't think there's a big deal they realize it might even jill ass. Let me get enough site later or talents often times when you're talking to the companies you're just talking to senior level. They don't want you don't want necessarily eateries. He will get distracted for jobs. They once they get sold within culture from day one. Something media wants to deal now. Make sure brio visit go. I would now. But you've done a couple of years now. During public beyond virtual facetime zoom meetings. We made sure we had all of our executives on video call. We talked better benefits at a day. One we all all the team members. Divide and conquer it on. And that's worrisome. Has to be because because you just don't get a chance to talk all the gm and once they're part of your team you do and i always liked incentivize numbers. Well even if they're not owners. Stop i want them to hit the ground running and always to give them a near term ninety five of them that they may us this transition. You don't lose any customers due to churn in lockstep day one telling clients that zach gone down. That's under them every time. A don't always got talent. That didn't know wasn't that price by just didn't get a chance to talk about communication with customers existing and customers. What does that look like. Easterns get rent but we to at least slow again. I'm all about it so we want you out of the gate. Get to obviously the largest customer spurs. We've already thinking about the radials done. What the message is what is the benefit. What's in it for them. So we're ready to go. And we ideally do it with a member of the expired team that already has relationship. We don't know the customer partner and show them out of the gate within twenty four hours deal denver together on a call and we fly out customer. That's really catch. The bet sumer said and then we would you press releases mu talks the media. We let host now that this has been done. We don't change too many things especially it's not broken for what's interesting when you offer such in that first initial outreach. Wanted to meetings usually get Things they wish that they could have cut done. And so far we've always been buried smaller companies which means that. We had more resources so usually planner burger conversations. We might already have something already built. They were waiting for from smaller and just relatives. And we don't run out embrace rates out of the gate or reload for and listen to them. To what has been your. How can you not together you more for you and asked them and just keep that. Open fish listening okay. What they need right now. Get an early win and now wants to build custom. Forty your those right. You've got to really support the individual that has the existing legacy relationship but also. You've got a pretty quickly. Made sure of routers understands. This is now our line partner. Better support dinner. Let's go back into the inside view of distributing or resources and play as you started this deal pretty early with their executive team. Pretty hands on looking at this deal for the whole life cycle of any start working with your internal resources. You go through confirmatory diligence if the bird's eye view and traffic control and really make sure those pieces are coming along and dive into there. Is that neither tension and now you're into integration. When this is the real meat of this stuff could get complex and starts. Yeah how does that change. What does that look like. When you're deploying your internal resources again without having dedicated teams arranger referring to do the deal. We have in mind what we're going to georgetown goals and compensation even for because we know you still have your day but it weakens together goals. They might have bonuses or things that were letting them now. We do realize out of the gate might be more hours but we want everyone win. We also re really living read are dying. Used one of them's think like an owner oliver boys and stock options. And we're pretty clear like we can't make guarantees but the more we grow the more we do since positions some wing as a stock owner and watch. Your stock would be worth more beacons together. We're bigger were better going so we remind them too often. I think poppies in stock option plans. Never explained anything about stock options. We do a quarterly meeting of anybody. That's uber company. Or getting stock options. And i talk about what they are so i think that's important to get that. Buy in and really arts gets excited. Our sales you'd get excited about sell something new. Because our product team guys mimi about some new feature or earner can we reduce expenses that improve our margin. Like huzzah were altogether chunk bigger. It's together and again i think. Trolley we do. All this is us versus them with emi department. Oh that does not emanate cheetah bags in our stuff. There is no one's laying. It were doing it ourselves right. You can't just might the guys. You actually as a team champs beth these things now. Of course the wendy. We're always also very confident yards so the deal is the west that you'll happens. We really want people know about it from day. One you invite the new. Never on paul's we will sometimes even retro something. i'll give you an example one of our recent acquisitions. The prior company never did like an annual president trip. Other top salespeople. it just didn't have that and we are to rape people and they you great numbers grew up in a house by a company and they were still being a great numbers and even on the trip. We recently took whisper last year. Warning of our company. I was like let's bring up. I know rewarding them for revenue. That the ira owner received. But i think this is awesome. Mit emails. that's bringing people. One of the fold and explaining. Why do it really does help you live together. Faster and realize that my benefa- which is the recently driving ability ownership with the people in all the activities. I need to get done. Integration the thing that stands out most to me is the way you align everyone around the company value. Hey everybody's got a piece of this and we all need to work together to really do the right things to ultimately create organizational value. That's right yeah are familiar the owner. We're all hours. We also have plants lynn so suddenly dude one our client base. Just i'd the opening cibubur by thousand businesses would be do because it's already acquisition her sunny seven hundred. Now we don't think everybody and that's our clients when we also have a value whatever it takes and that goes to everybody day one or entertainers always whatever. It's there is no. That's not my job there is. Now's doing your boss worked together key. Whatever change for each other and our clients so they have success an and we really have another valuable passionate action. Love what we do so we don't always get everybody in the right seats on the bus day one but even when bringing in that new team. What's your passion. What do you wanna do. I know you're a customer service agent right now something else you wanna do and we really we try to get. Everybody really excited about what they're working on. And that's the art of it as well. Really great values. I like to think like an owner. That really stands out. We actually put it on a wall at today for her graphics team on our new office we just be imparted the acquisitions. She got graphics win in the wall and she showed it to her regular in the wall of cool man look for is team bringing on. What's something new and fresh. That's better now so in pretty much. Every single case within about six months to a year we got many wasps or give them need benefits. We do something new. Just i don't want them thinking. Same all i've just never owner and we really talked to them and make them a part of the process in a new office. Just open tampa. He had a team that we acquired. Go look prostates. Where do you guys what he didn't made them relate set at about it and that's really what we're all about. Where one in together. You want to have people experience to be an upgrade yet. So let's look at the first half dozen deals you've done as a company and i want to know what are the biggest lessons learned. Sometimes you learn the most from the deals that don't do early on in our nda's we did not have no solicit odyssey and we actually heard. Somebody hung out your us to take our team wednesday. Learn a bit more about us. So that was insane. That's non negotiable sides. We're not seeking meeting single. Hire your people or vice versa. So that's a lesson. I would say people need to think about jeans. What else did we learn. It's very hard. If there is a day to day management or the founder still involved and ensuring the process run at only by to be see. Bats challenge no matter what they say sums known. Honor if there's no more leadership keener blaze and they're trying to convince you it's a great deal. It's probably not and it's interesting. I learned how little the no that's horrible answering printing these new firms but it was difficult. It should longer than it should have ended up. Not doing unity all. I think that would be something you'd learn to avoid that. We really wanna know. We'll be able to talk one on one just eating hundred zero consideration faith with somebody that's really running for this would be a couple takeaways and then devil's in the detail really know the numbers trust but verify the kgb. I think that's their slogan. Could not really look at these things. Verify made sure that there's no little shell game the other red flags look out for. I would say again. See what they're doing online talk to customers if you can't you don't want your under. Nda hours like go interview customers. Begetter a sense of the states if you're looking at a company that's one of a couple of players don't some plants you partners you vendors and say regatta. Best product diligence even before your in diligence. What's advice you'd give to a ceo those pursuing the acquisition. I tell you that this is my advice. I waited too long. Brisk more so we did early on and he spent a lot of time trying to get a perfect and i wish it would have done more. Sooner is a lot of variables though depends on your ownership berkshire. What your wards Whatever you're doing. But i do wish we would have done more center so that would be my advice. Don't be afraid and certainly take meetings. It calls bidirectional right now. Both come to us and say hey doesn't for sale and i'm like no way you never know so i took one hall. I talked to a lot of people i think. That's also the don't shy. Wait and something and assume like sumptious borough. They do to make an asset. You assume too much. So i just wouldn't assume i would take more calls. I would talk more people and don't be afraid of it even if you're not quite ready to the open minded and when you say go for that i deal sooner. Is that essentially as a learning curve. And the sooner you start the better you'll get at it over time or is there something else so and i think that since so wrapped up in a half to your check after the time. You can still doing that longer. Currently navy binds and technology. You're looking for other opportunities. I think you can do things. Bill house i really do as sometimes you get so in the weeds on our head down doing our own thinking of the answers. I just get health from your perspective to be open minded to be a little more willing to decent. Sooner was the craziest thing. You've seen anime. That's unheard as a lot of things not with digital airstrike but on a fire transaction shirt li listeners. As the people are they're coming with the deal literally had not talked cultured. Did not know anything. I remember being on calls with a company and they were actually from california lane new yorkers that they had to end a call because they had to go surfing shift. Mac and i'm like you talk to each other. You're different schedules. The whole thing was weird. I don't know if that's exactly raise. You don't have any dirt. Share back to us. Crazy a macabre. Would you got a deal. Stage shut beat so out of it. Just reminds didn't even know the people that refunding steel you're going to work together. Praising i think you've really gotta get starts handsome people if you don't look past the spreadsheet up with those house even hang awesome idiot. You're getting surfers runs. Nobody new york hours notice. Kind of a thing. I've heard about other things where it wasn't a deal. I was on my. Here's the company not understanding their different states or different policies that abyss and they were like letting people smoke weed in the office and they were shocked. Wants to deal with. And i'm like how do you not know this you didn't look at state or the hr policies. I'm sure the our through all that but for me. I just like that prison really got to know what you're getting at. Be cool with it and sometimes honestly those different cultures that actually help your ultra. There's something new neighboring herds handle some energy either really created because they let them do that. I don't know. But i really do think that not knowing the gate even get talk with an ally is not i. Thank you so much for your time today. I enjoyed this conversation. I learned a lot of your brain. Thanks to the deal. Thank you for taking the time to explore the world of manet with our podcast. Please subscribed for more content conversations with industry leaders. He like our podcast. Please support us by leaving a five star review and sharing it. I enjoy hearing feedback in connecting with our listeners. You can reach me by email. It's qissan deal room. Dot net emanate. Science is sponsored by deal room a project management solution for mergers and acquisitions additional educational content is available on deal. Rooms blog at deal room dot net forward slash block. Thank you again for listening to science. See you next time. Using opinions. Expressed on emanate science. 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