How to Build a Global M&A Machine with Sindre Talleraas Holen Part 1

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2:24I'm Kisan Patel, and you're listening to M &A Science, where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies, and what actually happened during M &A deals.

2:48Hello, M &A scientists. Welcome to the M &A Science Podcast, where we learn from the best in M &A to uncover proven techniques for enterprise value creation. If you're interested in learning more about how to optimize your M &A practice or want to get involved with our community of forward-thinking M &A practitioners, visit mascience.com. Subscribe to our free weekly newsletter. If you want to keep up with us on the go, Head over to LinkedIn and follow M &A Science. I'm your host, Kisan Patel, Founder and CEO at Dealroom and Chief Scientist at M &A Science. Joining me today is Sindra Talerhas-Holin, Head of M &A at Visma.

3:29Visma is a leading provider of cloud-based business software, specializing in accounting, payroll, invoicing, tax, and HR solutions. Visma has over 16 ,000 employees, serving over 2 million customers across Europe and Latin America. Today, we're going to talk about how to build a global M &A machine with local expertise. Sindra, how are you doing today? Good. Doing good. Thank you for hosting us live here in Oslo, Norway at Visma's headquarters. Yeah, great having you. And welcome. Great excuse to get out here to Northern Europe and hit the slopes as well. Yeah, you came with the snow, right? Over the last few hours, half a meter of snow have come here.

4:11I had a lot of fun yesterday. That's not the most exciting part. This conversation is going to be far more than that, even though it was an amazing day of snow yesterday. We should actually do a little background on Visma first before I get to your background. It's just been really interesting. I read up on it and the company has a very extensive history with M &A from even how it was formed. Can we talk a little bit about that? Visma was formed in 96 when three ERP systems were actually merged. Our former CEO, he then joined Visma back then in 97. The rest, of course, is history. Back then, we were listed on the also stock exchange.

4:46And then just around 2000, just before the dot-com bubble bursted, Visma were able to sell their shipping division. There was a marine division to a telco company, and they sold it for like 100 million euros, which at that time was absurd multiples. But nevertheless, what happened was that Oyssen, he actually, Oyssen Mohan, the CEO back then, he actually got a lot of criticism in the media because he didn't take shares, only took cash. But then, of course, the dot-com bubble bursted a couple of months later. And Visma, I mean, back then it was a very small company. It was a small ERP business.

5:19But then Visma actually had 100 million euros of cash and all valuations dropped significantly, 90 plus percent. And then the M &A spree started. So that's how sort of the modern Visma started. Then I started to get out with the CFO, started to do M &A quite a bit, buying competitors and adjacent products around ERP. Then HG Capital delisted us from the stock exchange in 2006. And I joined 2009 as a management trainee, as a part of the graduate program. My history starts there. From there, very early on, we deliberately took a decision to move towards cloud. That was pretty bold back in 2010. So already back then, starting to think about cloud.

6:01Right now, it's a complete no-brainer. But back then, it was not. Early. Yeah, it was until even 13. But then enterprise took a lot much longer to adopt. Indeed. So if you look at it from that historical lens, it was a pretty bold move. It's going from on-prem to cloud. It's also painful. But when you come on the other side, then it's a much nicer place to be. Now we are 90 plus percent recurring cloud. And then it's a real cloud, not hosting, not ASP. And it's multi-tenant SaaS. How many deals has the company done since inception? Somewhere along the lines, you sort of lose track, I guess. But sort of my accounting is 350 plus, probably 400.

6:39And then you personally, how many deals have you been involved with since you started? Probably over 300. So a lot of this activity has been sort of in this recent decade. Yeah, even though they were quite acquisitive also pre my time. But then you have to recall it was the CEO and CFO who did the deals themselves. It was more a left-hand activity. But now when I joined, we set up a, we were actually a two-man band running around in the Nordics, buying small software businesses for a decade. Then my boss left for HG and I took over five, six years ago. And for a short interperiod there, I was a one-man band.

7:12But then I started to hire and now built the current M &A team. What's your personal background that qualifies you to be heading up all this M &A activity? That's a great question. I came straight out of university. So company man. Started as a management trainee. Actually, three out of the top management team is actually coming from that graduate training program. So that's pretty unique. And then very quickly it turned into M &A. I've been doing M &A almost for two decades now. Is this like one of the top Ivy League schools that print out people like you? Or is it more of just give somebody with ambition a chance and see what they can do?

7:46Visma is a pretty unique place. Giving people a chance and then when you swim at 10 meters, then they throw you at 50 meters and throw you out at 100 meters and so on. See how far you can make it. Yeah. You came right out pretty early. What was the experience like in the formation of the M &A team? Because you said prior to you joining, it was mainly the CFO and another person in the company that was driving the activity. But then they set up an M &A function. Yeah. This is down memory lane. I was actually quite bold back then, this 2009, straight out of university. I wrote the CEO an email, sort of asking, because we were actually planning an IPO back then, 2010.

8:20And then KKR preempted that. But I actually brought him an email, sort of, hey, we've just started in Visma. Do you need help with the IPO? Pretty bold, maybe even unheard of. But yeah, I did that and he replied. And the plan was actually to hire a IR, head of IR and M &A. And then when you have one big investor in KKR, then you don't need IR anymore, but you need M &A. So the IR function just shut off and then we had this M &A team, me and my former boss. So this really originated of you sending a cold email to the CEO. He doesn't know you know you. He just reached out and said, hey, I heard the company's going IPO.

8:57Can I help out with it? That's pretty much it. The KKR story is actually really interesting because I read about it. They came in. I didn't know it was tied to the IPO. I know they bought a majority stake of the company. HE Capital is still involved. Yeah. And then later on, I guess HE ended up taking the majority back. Exactly. KKR should regret, but yes, that's the story. How long were the owners for? It's a typical PE cycle. So it's that three to four year cycle. Enough to show good IRR and then move on to the next thing. Exactly. So the cold email that led to, hey, let's talk a little bit about this.

9:31We're changing directions, but we still need M &A. And then I just want to start doing some M &A. Exactly. Then my first job for the CEO then back then, 2009, that was actually to hire my own boss. We were pretty efficient. Two-man band running around, mainly in the Nordics, a little bit in the Benelux, a little bit in Central and Eastern Europe. But we were able to do 10, 15 deals per year. So for a two-man band, that was not bad. I want to hear, you've done hundreds of deals. What are the top three big patterns, themes, must-haves that you learned over time? To set the stage a bit, the type of businesses that we acquire, that's typically well-run companies that has a proven product, happy customers, happy employees, very solid management.

10:15That's the run-of-the-mill M &A that we do. So to have that background, we essentially buy good companies. Don't buy turnaround companies or turnaround situations. High level, I would say the important aspect is actually to stick to what you know. For us, it's always to have that North Star, to have that alignment with the equity story. I do believe that's super important. So to always keep that in mind, will this enhance the equity story? How does this fit the equity story of Visma? I do believe that's very important. So that's maybe one element. And speaking about alignment, I would actually argue having that internal alignment is as important, if not even more important.

10:57So with all the internal stakeholders, we always say that M &A, we cannot be a champion for a deal. And we would have done a lot more. We always need to have that operational champion. So to already pre-LOI, you sort of need to have that internal alignment in that context of, okay, is this a 100 % acquisition? Is it an earn out? Is it a one-year earn-out? Is it a three-year earn-out? Is it a five-year earn-out? What type of metrics do we measure? Is it an EBITDA game? Is it ARR? Sort of all these type of discussions that you need to align internally. I do believe that is very critical. Maybe the last thing, this is more maybe relevant for Visma as a firm, but we like to buy proven companies.

11:39We have customers. We're not the VC player. VCs, they have a different agenda. One out of 10 hits the jackpot, and then we're all happy. But we are not a VC player. We like to buy proven companies with proven customer bases and proven products. Ideally safe bets. Ideally safe bets. Every now and then we do a bit more hairy bets, but that's not the run of the mill. So stick to what you know, align with the story of the business, the Visma story. Having an internal operational championship that's really going to deliver on the results. And then buying proven companies, ones that aren't just big risk bets, but you're sort of building a model that gets your returns.

12:15Good summary. I'm curious about the culture of doing acquisitions. I mean, you know, you have Europe and then there's, you later got into Latin America. Are people just receptive? Because it sounds like there's so many deals you've done that you call people and they're like, yeah, sure. We'll talk to you. We'll take an offer. Sounds so easy. Just walking around the office, seeing all the buzz around here. I'm like, this is pretty interesting. It makes an M &A look easy. I've looked at your website. You've done deals in so many different countries. Let's take that alone. How many different countries have you done deals in?

12:47It must be 30 plus. Yeah. Okay. Is there an element around that? Is M &A recede culturally different between countries as you approach targets? Absolutely. No, I think it's very, very different. Even only in Scandinavia, Norway, Sweden, Denmark, and Nordics, Finland. I mean, it's very, very different. People might from the US perceive that, yeah, Nordics, same, same. Very different. So even here, it's very different. The more south in Europe you get, the more emotional it gets as well. And then you throw in Latin America in the mix and it becomes very different. I always have a saying, M &A is local.

13:21That's just super important to know. And 3D is always way better than 2D. So you need to meet people locally, speak their local language, see them in the eyes, and really be that local partner. I do have a tremendous faith in that. That's also why the M &A team right now, you're almost 20 people for M &A professionals. but they are based all over Nordics, Benelux, we have Germany, France, Spain, Italy, Central Eastern Europe, UK, back to M &A being local. It's so important. And that's what they're doing is they're adapting culturally, locally, and catering to that M &A conversation based around that.

13:56Yeah, language is one thing. To be honest, it's almost the easy part, but it's about the way you're negotiating in a country is very different. Brazil, I've just learned that after the LOI, that's when you really start to negotiate. after the LOI. After the LOI. After you think you have agreed on everything, then that's when the negotiation starts. So it's just very different country to country. So to have that local domain knowledge, to have that local knowledge around the whole cultural aspect, I do believe it's super important to be a local. That's so interesting that you've had such a diverse experience around it.

14:31What other things do you see? I'm curious, like what countries are the easiest to work with? What are the hardest ones to work with? All countries, they have their peculiarities and their specialties. And then it goes, I'm from the US and it's like, you're going to have some really good sellers and some really bad sellers within our country. And I take it every country is similar too. You're going to have some good apples and bad apples. Absolutely. And you have that in Norway and you have that in Spain and you have that in Argentina. That's just a way of... There's some fun cultural differences to sort of accommodate with.

14:59Take trust as an example. That's here in the Nordics, in Norway, we do actually trust each other. There is a lot of trust already on the first date, essentially. And it's not uncommon that you even start talking. I mean, we're commercial people and opportunistic. You can even talk about pricing on the first date. First meeting, then it's not uncommon. It doesn't happen always, but not uncommon. But if you go the further south you go, and Latin America as well, trust, that's super important. Particularly, everyone knows about Visma in Norway, Nordics. Not that well-known in Latin America yet. To have that trust, that's not built over Zoom or video.

15:37That's one thing. And the other thing, of course, is it takes time. So to talk about the family and talk about business and get to know each other, these things are very important. Okay, so your advice to me where I'm working on first international deal, let's just say it's in Germany. I should go meet the people. What else can you tell me? What else should I be doing? First deal, I'm looking at it. It's international by nature. In Germany. Yeah. You should look forward to the fact when you're signing the deal and they are reading it up word by word at the notary the whole thing from A to Z it usually takes between 10 and 15 hours that's the highlight do I have to sit there through that?

16:16you have to sit there really? I hear they do drink champagne while reading but yeah it's very very German but yeah meeting each other face to face I do think that is important whether it's in Germany whether it's in France or Norway to be honest that is important as part of the M &A game any other nuanced things as you think about culture I bring them like a nice cool M &A science pin like I brought you. Maybe they get as impressed as I were. No, but it's talking more from the Wismar perspective. Yes, there are all these cultural differences. But I would also say software entrepreneurs and tech entrepreneurs, they are tech entrepreneurs.

16:51That's a universal thing. It's almost a universal language to meet tech entrepreneurs and to speak to other tech entrepreneurs. They do tend to bond across borders. So I wouldn't underestimate that point either, to be honest. Industry culture. Let's talk about execution. One of the big things I've been, I don't want to use the word ranting, but advocating is around buyer-led M &A. And it's just what I've noticed companies and the way they evolve their M &A function really starts from seller-led. And then as they do end deals, it becomes very buyer-led, all in the pursuit of better M &A outcomes.

17:29You've obviously seen tons of deals. What's your view on a buyer-led approach to M &A? I guess you're right. When you start doing M &A, by default, it's a bit opportunistic in the beginning. Then it became quite seller-led in the context of what's for sale and those type of things. But for us, we like to drive the M &A agenda. We have a pretty clear agenda in terms of what type of targets we're looking for, what type of geographies, what type of products, what type of growth rates, SaaS KPIs, cash flow margins, etc. We have that. And I do believe it's critical to own that ourselves instead of just being completely opportunistic and run after whatever pops by our desk.

18:08I get probably 10 inbound emails every single day by people from brokers, small broker houses all over the world, shooting an email on a random verticalized ERP or whatever it is in all over the world. So you can jump after all of them. Where does that sit in terms of you get a bunch of inbound versus proactively pursuing opportunities? Do you sort of prioritize one over the other? How does that play out? Yeah, when you've been doing this for almost two decades, you sort of have a very good gut feel in terms of is this good or not? Is this worth our time or not? I have a pretty good gut feel on that.

18:44So you do a really quick assessment of like, all right, are we going to click down on this or not? Otherwise, when you're proactive, you know your scope pretty well. Exactly. I probably spend 10 seconds deciding whether or not this is something to pursue. Of course, us reaching out to targets, that's the name of the game. Those are also the best leads. What about actual execution? Yeah, when you reach out to the targets, that makes a lot of sense because you probably even know the business pretty well ahead of time. Yes and no. Even in the Nordics, right? I've been doing M &A here for two decades in Norway.

19:15You would argue I probably know the B2B software market here pretty well. But even here, 5.5 million people, 500, 600 ,000 businesses, every now and then it pops up random new companies that I've never heard of. That's 10 million ARR, growing super fast. I don't think it's possible to get sort of a complete oversight. What's unique with Visma is that we, yes, we have around 20 M &A professionals only working with M &A, A to set. But I would actually argue our M &A department, that's 15 ,000 or 16 ,000 employees. That's the front line. And they are the ones. I do believe this is a pretty unique culture, but the whole culture of Visma is about growth.

19:53And these guys, they know who are they losing to? Who are they winning against? Who are they having most API calls from? What would make a perfect add-on to an accounting system? All these type of things. They know that more than us in the M &A department sitting and Googling or using AI. So I do actually believe leads coming from line management are sort of the best leads. How do you get them together? Are you running around trying to have as many conversations to see what ideas they have? Or are they more built down the process where they're bringing stuff to you and they start negotiating, sending out LOIs and then tell you about it?

20:29Oh, no, they should not go out any LOI without my signature on it. That is important. So I'm aware of all LOIs. How do you build a funnel out of this? I agree. I see how this could make a lot of sense. The people that are in the market and see all these opportunities. Yeah. Also, the fact is, it's very clear guidelines across the Bisma organization that line management, they don't negotiate pricing. They can talk to companies, they can talk to competitors, they can talk to adjacent companies, etc. But they don't do M &A. They are a friendly, warm intro. They know enough to know that, hey, if you come across an opportunity, we have a process for that.

21:06Yes. And then they tag us into it. How do you address that? Is that something you just hop on a company-wide call periodically and put out there? or what's your approach to getting that system set up? To be honest, I think it's fairly easier. People know when they should not start talking about M &A. Some MDs are, for instance, in Visma, they are more proactive than others, like anything in the world, right? Some like it, some doesn't. But at the end of the day, they also know that pricing, structuring, these type of things, then there is actually a world-class M &A department that we should pull into this.

21:39The leadership team is really what's aligned and they have a good sense of that because they just know the workings of deals they've seen done before and just how the company culturally thinks about M &A. Exactly. And the reality is once we actually start talking about M &A, we're always actually involved. That's just the way it is. What about actual execution of deals? When you think about being buyer-led, is there things you do there to drive that process? The sell-led process, you got a bank there and they are there and they're trying to get the deal done as fast as possible. But like I said, if your goal and your success track record is more about having the best outcomes, what are the things that you do to ensure that?

22:19We have our standard procedures. I think that's also a good thing because even though, you know, we use a lot of operational people in the due diligence streams that we're doing. We have an in-house team on FDD, on legal, on tech, etc. So we can do a whole full-blown M &A process in-house. Quite a few of them are very familiar with sort of the M &A process, but there will always be people that are not. But we really try to have a streamlined process A to Z. This is how we do things. It's a Slack channel. This is how we work with that. This is how we communicate with each other. And to really be transparent in that group, that is important.

22:58We have our playbook. The M &A playbook in Visma is constantly developing. We have people from competitors. We have people from PE. We have people from investment banks. We have people from other buy and build platforms. We all take that and always tweak it to have best practices all across. There's a lot of different variables and nuances that you can continuously tweak to all in the pursuit of better outcomes on the deal. Absolutely. As you said, right, bankers, they tend to try to do a deal as fast as possible to get to a closing. We've done a deal in a week from reaching an agreement Friday afternoon and then Friday next week we've actually done the deal.

23:36Two, last year we did a deal here in Norway, case management system called Akos. Probably met them first time in 2011. It's 13 years. So there are long dialogues as well. Back to trust and relationship building and these type of things. Yeah, that's a good point. If you're proactive about it, you have to build the trust first and then those timelines, it's all for what's best for the deal. Exactly. Unless it's a bank process and it's all about getting the deal done as fast as possible. There's no right answer on that. I've noticed that deal by deal, it doesn't make sense to actually slow the deal down and really think through how the company is going to integrate.