How to Create an Executable Integration Plan During Due Diligence

23:12Buyer, how much do you want? Seller, I want X. Buyer, I want X minus five so we can at least say we negotiated. End evaluation discussion. And it's not that easy. I've been known to create some friction with CorvDev for a lot of things, which is usually top of mind at the moment for me. But again, you got to build the valuation model. You got to present it to the board. You got to present it to whoever needs to approve it in the company. And it is hard work. Part of this was you actually supporting the valuation or putting an opinion around it. Yeah, because again, as the integration, assuming the deal closes, the integration team is the one that has to take those value drivers and create value from that asset.

23:55How do I make one plus one equal three? And that's why I deserve an opinion on that. Now, to be fair, I don't really care what the valuation is. It doesn't change anything that I do. It doesn't change how I do it. But this is where, what are the valuation drivers? And very clearly, it's not what is the valuation. I really don't care. That's a PR headline and a big check to somebody. What I want to know is what are the valuation drivers that support the strategic rationale that has some implied valuation? We get an LOI signed and it gets signed. So we somehow couldn't create a value whether everybody was on board or not.

24:33not using the integration guy's evaluation or his methodology by any stretch. We took the time to listen to him at least. We get this LOI sign, and this is where rubber meets the road. And it sounds like up until this point, we basically have an outline of what we think the integration, how it should go down, some key considerations around it, which would include the people, the sort of approach around the integration and something like tech stack wise, and a little bit about the organization operating, how they do things. So then once LOI gets signed, then floodgates open on all the diligence information.

25:06Yeah. I don't know how much of this happens today. When I drove a deal and our approach at Microsoft, and I did this at both VMware and PayPal, but learned at Microsoft, there's preliminary due diligence, which is really arm's length. Don't share any trade secrets, really confidential stuff because you're basically just under NDA at that point. When you get to LOI sign and get into that phase between LOI sign and pre-close, or you're in the pre-close phase and then you get to close. There's confirmatory due diligence, which is the big rocks that could disrupt the valuation. And we've got toxic exec agreements, contracts, or commercial agreements, or escrow agreements, big things that could literally change the valuation of the deal.

25:50Legal has a lot, a big part in that. Then there's operational due diligence. And you do those ideally concurrently, but they're not the same thing. The operational due diligence is really understanding how the company you're about to acquire works. How do you develop products? How do you sell? Who sells to whom? How do you manage your employee base? How do you compensate your employee base? How does finance work? What are the systems that you run the company on? the really nitty-gritty operational components of how the company is run. Because that's really what you're looking to integrate for the most part.

26:27Are we just going to transfer all the data from their systems to our systems and then we'll deprecate all their systems? That's kind of the perfect state and really hard to do. Mapping data fields, and literally I've learned a lot over the last few months about data and the importance of data. I feel like operations almost today is just a whole series of systems that you're going to end up having different systems at different companies doing fundamentally the same thing. The good news is it's easier and harder now because most everything's in the cloud. So you're not like moving boxes around.

26:59I literally have worked on deals where you take a terabyte drive, plug it in, download all the data, put it in the back of your car, try not to forget it or have it stolen because it's got about a billion dollars worth of data in it and plug it into your new box and then upload everything. Right now it's all in the cloud. It's not easy, but you can simply migrate the data. I mean, you've got to map fields and do all that stuff that data engineers and data ops people do. But it's a much more efficient process than it was 20 years ago. We have the operational part, legal part. Is there any other sort of pillars when you start thinking about it?

27:36Well, the one that's easy to forget, but probably number one is the employee integration. We've got the people. And I was going to ask is the customers. Do you think about it the same way? because you mentioned that earlier, we talk about employee satisfaction and customer satisfaction. So do you look at customer as its own pillar or is that more of a supportive thing? You do. So in due diligence, you'll typically map what is the overlap of the customer base? How many of the same customers do we have? And then you might have customers in new regions where you don't have a legal entity, but you're about to acquire that legal entity.

28:07There's a lot of mapping that has to go on and a lot of rationalization of, do we really want to be in that part of the world? What's the real return on that investment? Setting up a legal entity in a country you're not already in has a lot of strings attached to it. And that's really hard work as well, the whole legal entity thing. You do have to think about what are we going to do with the customer base? Because that's where the revenue comes from. What are those customer contracts or agreements look like? Are they assignable? A really simple question that sometimes has the answer of it depends.

28:41kind of thing. Because there might be some conflict with that customer who has a contract with one of your competitors, who has some first right of refusal over change of control kind of thing. It can get really pretty fuzzy pretty quickly. So that's why you do the due diligence. So you got to look at the customer base, the customer agreements, the field, the resources, the people doing the actual selling. Do you need two people from two different companies? that'll be one company selling to the same customer. Okay. We have four main pillars, legal ops, people, and customer. I want to get practical in terms of how you do this because people, Jim asked me for a template to do integration.

29:18I'm like, it's not really a template to do it. You extend off your diligence to know how you're going to approach integration. But then when I say that, you start thinking, we're just waiting for all this integration information to fall from the sky and you build your integration plan around that. What we've already laid out doesn't quite come that way. start early and understand where the driver's the deal and get some at least a thesis of how are you going to approach this integration now that we get all this stuff and it sounds like we got these key areas we got legal diligence going on operation we got our work streams for people and customer are we like actually making integration plan are you doing a lot of it do you just own functional leads in a room and start putting a whiteboard and saying what do you think we need to do everybody does it different there are obviously platforms that will guide you down the garden path of integration planning.

30:03This is part of it. And just so you know this, like I'm building AI in Deal Room. And part of it's for me to learn this practically. So I know how I can get AI to do as much of this as possible. I think it'd be awesome to be able to chat GPT, say$20 million in revenue, global deal value drivers are the following. What's my integration plan? What I'm learning is this is what's different is you have to provide a comparison, the information by your parent company for that to actually work well. Yeah. And we don't do that today. When you run a deal, you sort of assume you're God and you just go buy a company and this is what we're going to do, this and that.

30:36It's just like a domain knowledge versus when you start leveraging it, you need to create a workflow to provide that context. Workflow is really important. And the reason I say that is so my approach historically has always been start with a framework, not a checklist, but a framework. Okay. What are we integrating? People? Yes. No. So ops, IT, yes, no. Employees, ops, finance, R &D. You go down to several functions. I like this because you're going to hit me. Because one I was going to ask you is, how does the deal structure itself impact the integration plan? And we talked a little bit about it.

31:09We're not keeping the text. That's a huge section you just black out. It's knowledge transfer, whatever that means. Knowledge from a document, knowledge from talking to employees that might or might not be around long term. For me, I used to joke, and it wasn't really a joke, but I used to joke that I would find out more about a company pretty close. I'm talking to the IT team, the facilities folks, because they know the layout, they get the buzz, they know who's talking about what, they overhear stuff. The IT team knows these guys are just prima donnas and they always want the latest technology.

31:44And who are those prima donnas and why do they think they should have such great technology? like the non-due diligence happens in a hallway and there's a huge amount of value. But you got to build some trust. People are like, why are you asking me these questions? Am I going to be fired? No, I'm just trying to understand how this place works. And I don't mean from an exact lens. How do you do your job? What makes your job easy here? What makes your job hard here? You'll learn more from those hallway conversations than you will from anybody. So back to the framework. So that all informs the framework.

32:15Having those discussions, taking everything out of preliminary due diligence, confirmatory and operational due diligence. So you build out a framework. It's usually a timeline by quarter, first quarter post-close, second quarter post-close. Key functions, and then start double-clicking on those functions. Then where it starts to get really interesting is then, okay, I've got this basically a matrix or a framework. What are the interdependencies? How much of the top line is generated from the next new release of product tax? What are the new products in the pipeline? When are they going to be generally available?

32:51And how does that impact the top line? We've all got the horror stories of salespeople suggesting that they couldn't hit their number because they didn't have enough new stuff to sell. And R &D people going, I don't have enough runway to meet what they're asking me to do for their customer base. I don't have the resources. I can't do it in six days, whatever. Now you get into SaaS and subscription kind of business models, which most are nowadays, and you're constantly releasing. Every week you've got a new rev of the technology and addressed six new bugs. Like your iPhone's a great example. Every time you do an update, they're largely bug fixes.

33:27It's not feature enhancements, it's bug fixes. Yeah, because customers want stable technology to run whatever they're running on it. As you build that and go from framework to double-clicking, building the timeline, tying the interdependencies together, then you know what to do next. It all starts with what's my end state? How do I identify what my end state is? And that's, you know, your executive teams like we want to spend$50 million on this business. You want to spend$20 million on your new toy. What do you want it to look like two years out? Smooth. You never even referenced the old company.

34:00It's all blended. It's all integrated. You've lost all the branding. There's no residual anything hanging out there. All the employees are like, this is pretty cool. I like working with these guys. That's the end state. Then you build this model, this integration plan to support that. So it's literally start whatever you determine. I'm looking for a successful outcome, two years out, three years out, five years out, whatever it is, one year out, then you start working backwards. You want a framework at the start, but you want it to be populated based on what you know to be the outcome you're trying to drive for.

34:32And as you go through the diligence exercise, you get a bunch of information and you just keep evolving that plan that works you towards the end state. I think a lot of people do this end state view, but they don't know they're actually doing it. And I've always just been a big bang the hammer on the anvil, like end state, end state, end state, every deal, the deal exact. What do you want the end state to look like? What do you mean by end state? Okay. What do you want this thing to look like some number of years out? And this tells you how much to integrate. I think that's a funny thing where you get flipped around.

35:00How much does company to integrate. Do partial backend, fully integrate, do not integrate. But in your view, correct me if I'm wrong, is if you're really focused on the end state, that'll give you that decisions. Those decisions are an outcome of that definition of the end state versus the other simple way to think about it is if what I do tomorrow, which I believe is going to be the right thing, whatever it is, is not aligned to the end state. I use that analogy. If you start in San Francisco and you're just traveling east, but you want to get to New York, but you're three degrees off and you end up in Wilmington, North Carolina.

35:35You're like, but it was only three degrees off. But yeah, it's self-perpetual. It's like each day you're a little farther off and a little farther off. And there's like this geometric progression. And all of a sudden you're like, where am I? And that happens in M &A. You all of a sudden wake up one day and go, I don't think this is what we meant to do. Oops. Yeah, pretty common theme. We are building an integration plan. We have a framework to follow that helps us build our thinking from the end state and gives us these decisions to make of putting data together, how we're going to approach the systems.

36:08I guess this is where we start building timelines in terms of kind of workshopping is the right word, but collaborating with the team members. What does that look like in terms of getting that like as approach to doing it? So when I was at Microsoft, I started out, I knew what to do. Just leave me alone and let me do it. That doesn't scale. I think what you're referring to is the concept of what we call whiteboarding. And what you do is you bring everybody in, all the functional leads, key contributors, ideally from both sides, everybody, the FP &A lead, FP &A lead, head of HR, payroll to payroll.

36:44And you literally, in the old days before whiteboards, we used to put a bunch butcher paper up around a big conference room. And we would write whatever the timeline was by month, by quarter, however you wanted to measure it. And then you would put the rows of the work streams. So people is a work stream. IT is a work stream. Customer success, global service, whatever you want to call it, is a work stream, etc. And you start to build out what has to happen in each of those months. But if we go back to what I was just referring to, you start at the right end of the whiteboard and work backwards.

37:20Your natural inclination is to go left to right. We learn to write that way. It's different around the world and I understand that, but the concept is the same. But again, it's write the story from the finish to the left. And then you figure out what are the key milestones? Where are my interdependencies? Where are things going to break? Where's something likely going to trip us up? We didn't account for that. The integration budgets off. We didn't include the target sales force in our sales kickoff. There's a$5 million miss out of the gate. Things like that just become very apparent when you have them up in front of everybody and you can get the holistic view and synthesize.

37:56I'm pretty sure most people don't think like I do, and that's probably for the betterment of the world. But I am very aware of looking at a lot of things up on a wall and synthesizing. It just sort of happens naturally for me. It's not about reading it. It's about just observing what's up there and looking around. And that's where the train wreck's going to happen. We need to go there. Again, I think it's because I've been doing this a long time, but there are people that have that sort of capability early on in this sort of thing. And it's not just M &A, it's a lot of different functions. But again, start at the right or to the left.

38:31We call it walk the wall because people use post-it notes, you know, write down GL close. What do they do it on? What do we do it on? Theirs is better. We're keeping theirs. That sort of thing. So you put a post-it note that says acquired business GL, close process. But it's the kind of stuff we're thinking about now. The fiscal period is the same. 13 weeks, 12 weeks, calendar, fiscal, that sort of thing. And then you've got all kinds of accounting issues about how you're going to align your fiscal period. So you can do it out of the gate. You're going to wait a little while. When are you going to do it?

39:02Who's going to do it? What do you expect in the integration plan and like to the level of detail? So I'm a big fan of big order bets, boulder rock pebble kind of approach. That's easier to do with a seasoned or experienced set of functional M &A leads and M &A lead from finance. It's been doing this for a while, five years or whatever. It's got a number of deals under their belt. People leads, HR stuff. I let them do the double click. You know what? You just have to align to this. Oh, you want to get there? I'm going to leave it up to you, which is back to the framework approach. I struggle with people that have to follow a checklist because to me, it doesn't mean they're checklist followers.

39:40They're not problem solvers. The best M &A integration people in my experience are problem solvers, critical thinkers. They're not just looking at this as an exercise like we did A, then we did A.1, then we did A.2. I'm not sure what B is, so I'll just, but I got to figure B out before I go any further. Do you really? Do you? Does that mean you've stopped? I've worked with people that have literally told me to my face, I'm stuck. Well, why are you stuck? Because I don't know everything I need to know. So you don't need to know everything. You just need to know the next thing. As long as you know the end state, then you have a pretty good idea what the next thing to do is.

40:16I get that not a lot of people are wired that way. It's a struggle sometimes. Well, you had a good point. If you have experienced folks that work here, so new. Or enough experienced folks. If you've got a really solid integration lead and maybe a couple of reasonably seasoned functional leads, you can do the deal because they can help the other people that are like, I've never done this. Is there any parts of integration planning that just take a lot of time? I'm driving back to the AI examples where you have to. The thing I think it's really good at is taking unstructured data and structuring it.

40:47So if you got to really organize information through large sums of it, it's really helpful for that. Is there parts of integration planning that comes up? Because it sounds like a lot of this is just very conceptual. You're doing things and learning about the company diligence, and then you're just thinking it through with the leadership team across the functions and how this is going to go down. But is there more of like really nitty gritty having to shift through documents, or is that just part of doing diligence? A lot of it is doing due diligence and then becomes less about the diligence and more about just going and asking the person at the company, having that relationship, just asking like, Well, I remember reading this in the due diligence response to this question.

41:25But how does that actually translate into an activity? Integration planning is at its simplest form, a set of activities, one after the other, across multiple rows concurrently. Some move faster and sooner. But you got to make sure you leave no activity behind because that's the whoops. You go, oh, we forgot that. It's having that conversation. Weekly check-ins really help. Does anybody have any questions? Where are you at in your process this week? And just having that dialogue and then referring back to the walk the wall, which is really the start of the integration plan, big framework, a lot of information, mostly a lot of data.

42:02And then to your point, some of it's structured, most of it's unstructured. It's like robotics. If it was all just pre-canned, pre-determined, you just push the button and everything happens. But that's not what it is. M &A integration is like the Wild West, if people are really honest about it. A lot of people think they have a really crisp and clean process, and they do. There's a whole lot of stuff that happens behind the Wizard of Oz curtain where that's where the flailing happens. The chaos and the ambiguity are just rampant. But in front of us, yeah, this is pretty easy. No, it's really hard.

42:34When you go through this exercise and you get this plan that's really starting to shape, where do you get feedback from the target company, start syncing with them to get them on board? The ideal state is that they're as involved as soon as possible as you can get them. I think a lot of companies are different. Been around projects, not companies, but projects where we acquired you, just do what I tell you to do. That kind of doesn't work with a lot of people. Wait, you're trying to integrate me and sell me on why it's a good idea to be here, but that's not with the vibe I'm getting. Like, I'm just here to serve you in your role.

43:07Again, it goes back to, I just, I think M &A is largely about relationships. Friction-filled relationships out of the gate lead to friction-filled outcomes. It is true. This is a big exercise of leadership, getting aligned with other leaders, collaborating. I did a deal in Madison, Wisconsin when I was with Microsoft. And I remember they were largely being sold by the board, their board. Their executive operational leadership team was not all that enthused about selling. They wanted to keep running their company the way they wanted to run it. It was in the online shopping space. I remember having to have some really hard discussions with the leadership team.

43:44And they're like, I said, what's this going to look like for you? Like how long we want you to hang around for however, right? A year or two years or whatever, which usually suggests some sort of a hold back. And they're like, I'd really just like to get my money and leave. I understand that, but that's not our intent. And I remember one guy very specifically telling me, he goes, here's where it is, Jim. If I wanted to work for Microsoft, I would have applied for a job at Microsoft. I have no vote in what's happening right now. And you kind of have to help people work through this. Now I know what that feels like.

44:16This is a great deal for a lot of reasons. The current one I'm in, there's nothing but upside. Nobody came and asked me what I thought. Would you like to go work for a new company? I wasn't planning on it. I'm still stuck on the getting the target company's team involved early. Because it doesn't happen. I do a lot of these interviews. It doesn't happen. No, it doesn't. I ask people why. I get the whole where we're public company and just jumping laws. But as far as what I can tell, you could plan to pretty tenth level of detail as long as you don't actually do anything to integrate before closing.

44:50I don't see where the limitations are on planning and working with the TARD Company's leadership team on what that plan is going to entail. Well, I think it kind of comes down to a lot of patience and tolerance. The to-be-acquired team at all levels from the highest level on down. I kind of got a day job. I got a big product release coming up. I'm not interested in sitting through your integration planning meeting or process. But others are very interested in it. You know this as well as I do. M &A is hard. M &A integration is really hard. And most people know that either explicitly or implicitly.

45:23So when you ask them, you need to be part of this process, they're like, no, I really don't want to be. Thanks for asking. But yeah, there's a lot of value if you can get the right people from the to be acquired company to engage. I've actually worked with teams in the past where even in the early, so post LOI, then you have a little more access to people. I want your DNA in this integration plan. This will go a lot better and your colleagues are going to look to you. If you're invested, they're invested. If you're not invested, they're not invested. This is what it looks like. This is what the work is.

45:58Who do I need to talk to to free you up from whatever you're doing? But I want you to help us build the integration plan. Some people just light up at the opportunity and others are like, yeah, I wasn't really planning on hanging around. So thanks. I actually like that gesture of, hey, I want you to help with this integration planning and make sure this deal works for the best for everybody. Transparency and collaboration. Two big words, multisyllabic. But I know early on, I wanted to be in control and I didn't want anybody else involved. And I learned over time that can work kind of sort of, but then you realize, one, it doesn't scale.

46:30And two, it upsets people. If they feel like you're there and don't want to listen to what they have to say or contribute, or even ask them to do it, where they at least have the opportunity to say yes or no, it doesn't scale and it doesn't really work out all that well. When do you know you've finished planning? One of my managers at Microsoft, he was a great M &A leader who didn't come out of M &A. He came out of a function. And he would ask me all the time and my colleagues, my peers doing what I did, the integration leads. He would say, what does done look like? It's a really hard question.

47:02The easy answer is it's when you hit end state. But you think about when you define end state and say, let's just easy math, it's two years out. End state is two years out. What does that look like? So there are big buckets of things that you're going to accomplish. It's not overly detailed. Full integration of the employees, retention rates of this, one sales force, not an eight-legged sales call kind of situation. The dev teams are all split out. Whatever it is that defines end state. That's what done looks like. The thing is, Penn State does change over time. Two years ago, did we know we were going to sit down and have this meeting?

47:37No. Is it the right thing to do? Yeah. But it wasn't on our radar screen two years ago. It's the same thing in M &A. Like two years later, the economy's changed. Interest rates have changed. It's hard to borrow money. Oh my God, we got to put in a bunch of superchargers because everybody's driving Teslas now. You don't know that two years earlier. Then you get the two years and the whole world's changed, literally, in many ways. You got to be agile. Agile, nimble. This is my new kind of catchphrase. It's not a phrase, though. And I'm doing that on my current project. Simple, streamlined, nimble, agile, productive, efficient.

48:15And I tell everybody I work with and all the work streams I'm leading, everything you do has to hang off of one or more of those six things. Are you being simple? It doesn't look simple. Are you being agile? still doing the same thing the same way you did it a month ago. So I'm going to say no. It's really easy to pick at it, but that's my new thing. And the overlay is it's in an environment typically of chaos and ambiguity. The floor is moving constantly. Well, it's interesting how we talk through this in terms of integration planning. A lot of it is extending off of what you learn in diligence.

48:45Most of the time it's corporate development, a director or somebody of that sort level that quarterbacks the diligence process. Can we talk a little bit? I know we've talked about this before about how does integration ideally work in to get that diligence information so they can properly do the considerations around the planning? Or you've seen, I think it's an emerging trend where it's very much combined or an integration lead that's driving diligence. At Microsoft 2005 to 2010, which is 11, the time I was there, the integration team led confirmatory due diligence. We led technical due diligence.

49:25We had an incredible tech TD lead there. I learned more about technology from that process, all kinds of stuff that can create challenges in the overall integration. And I was like, I never knew that before. So massively helpful. It just removed one handoff from the process. I don't know a lot about electricity. Some people probably laugh at this, but electricity sort of diminishes over time and length and distance. So it's got to be reboosted or repeated. It's the same thing in due diligence. If you've only got five people doing the due diligence, and at some point later, there's going to be a handoff.

50:01Here's what we found. Here's what we learned. It's not going to be 100 % of what they experienced in the actual process. And yes, you can give everybody the readouts, the documents, and that's really helpful. But a lot of due diligence is sitting down and looking at something and then having the conversation with the person who was responsible for that at the target company, usually like a chief legal officer or the head of product. Unless you record those meetings, there's more learned in that dialogue back and forth than anything that can be written down. I don't believe you write down 100 % of what is said.

50:36Maybe there's a stenographer, transcript person. AI transcription tool. We'll have to get that integrates and feeds into the dealer. But then you've got to listen to all of it. No, you've got AI to go. Yeah, can you just tell me what's the five things I need to learn out of this four and a half hours or days of transcription? That's my favorite thing to do is I take transcripts. I take transcripts to these podcasts, actually, Jim. Or definitely the prep calls I do. And I feed it into ChatGPT or any tool and ask it. I'm with the outline questions for this podcast interview. It does pretty good.

51:07I think it's similar because I've seen companies do that where they're recording diligence calls. and they're using some type of AI tool to transcribe it. But I think that's like the next overlay is like, all right, can you make that part of the unstructured database? And then you're using AI to synthesize information. Yeah, it'll be interesting to see how that plays out. I think it'll be huge. If we're working on it, I'm using what I'm learning here to keep building it. The planning thing, I think, is what's interesting. If there's an opportunity to take diligence information and start repopulating some of the integration planning.

51:34But I think I like where you're going with it. Put consideration in the high-level plan first. You would have to inform the platform of where your target end state, what that looks like. And then it can filter in. This is what was said. This is what was written. This is what was drafted. And then connect the dots to what the end state looks like. That would take massive cycles out of the process. Even when you do due diligence, there's an HR due diligence module. There's a R &D due diligence module. And this is, again, to my point or comment about, I believe really good integration leads are the ones that can synthesize how all that connects.

52:12But there's no obvious way to do it. ChatGPT would be a way to do it from an AI perspective. But most people just sit there and go, I'm the HR expert. I'm the R &D expert. I'm the IT expert. Most HR runs on a platform. So if you guys talked, do you know how that works? Do you know what you found? If you populate a bunch of records out of Workday, is that the same set of records that HR has in the payroll file? It should match one-to-one, make sure everybody gets paid. And it does. I'm not quite, that's a low-hanging fruit example, but it's things like that, as they get more abstract, somebody's got to be able to say, that connects to that.

52:48We got to figure that out. We'll prototype something, play around with it. It'd be cool. Yeah, it's a work in progress. It's cool learning all these different use cases. This one definitely seems very viable. People actually reach out to me on these podcasts and they ask me this, but if they're doing an integration for the first time, they don't have anything they're really starting with, playbook or framework-wise. What advice would you have for that situation? So that comment I made about my boss at the time when I did my first deal ever said, what do you want me to do? I literally asked him that question.

53:19This was as he was literally leaving the building in a snowstorm in Boulder, Colorado and going big game fishing down in Australia. He's like, I'm going to be gone for three weeks. I will not have cell service. Just don't screw it up. You use different language, but it's basically that. Not helpful. But what I've learned from that in hindsight is ask a lot of questions. Again, I did ask him, what are we trying to achieve here? And he told me. He didn't call them deal value drivers or end state, but he told me what he wanted it to look like. I constantly was able to refer back to that. asked, okay, is this next thing I'm doing tied to that in some way?

53:59I just knew intuitively that's what I was supposed to do. But it comes down to asking a lot of questions. The company we bought was a huge team of math PhDs out of the Russian science institutes. Brilliant. These people were brilliant. So one, I didn't speak Russian. Two, didn't write code, and barely spell PhD. So I felt so useless in the process, but I started to get, figure out the questions to ask them like, how are you going to apply what you're doing to this next release of the technology? That I could understand. Once they'd go deep into the code, and I'm like, that's not my thing. When are you going to be done?

54:37Can I tell the field about it? And when can they start selling it? And then you got to tie it to the QA engineers and the build process and all that stuff. It was kind of intuitive, but it was about asking questions. And sometimes they feel like the dumbest questions in the world and they're not. So for somebody that's really new to this, it's problem solving and critical thinking. Sometimes you got to go slow to go fast and ask people like, what does that mean? I don't know what you just said. I don't know what that means. Whatever that is, especially talking to engineers where you're like, unless you're an engineer yourself, you're like, do what?

55:08When? On what? Kind of thing. Ops and finance, I was fine with that. HR people is hard, but it's pretty straightforward. What are we doing with the employee base? Literally, I asked, are we keeping everybody? We're not keeping everybody. He goes, no, we're going to keep everybody. That was easy until you got retention issues. And it's not easy. Like, why are you leaving? It's cold here. I want to go somewhere warm. That kind of thing. But it's literally being humble and asking questions. That's the key. The key overall in M &A. It really is. It all levels. Senior execs down to probably the most junior person.

55:42It should be the same approach. The questions are just different. What's the craziest thing you've seen in M &A? I think it changes. I've had a lot of those experiences. I will say right now, a carve-out concurrent with a large integration process is crazy in a good way. Again, I had a really bad day. I think it's just intellectually interesting. But these are really hard problems to solve. Because you've got a lot of moving parts on top of moving parts. It's that whole fly the airplane and build it at the same time. I've always used that analogy from an M &A. that's how I describe M &A integration sometimes.

56:17This is sort of the PhD level of that. Because you're trying to carve out an asset that then you're trying to stand up as an independent, fully functioning company that was literally engineers and product management people, some marketing people. Now you got to build out IT infrastructure. You got to build out partner and channels. You got to bring salespeople in because they were a centralized resource. It's really hard. It's really hard. I want to joke that my beard was dark when I started this, but I think most people know now my beard's been white for a while. Yeah. I mean, just divestitures or carve-outs in general are complicated.

56:56So doing integration at large scale. Well, and that's the other thing. I actually had to inform some people the other day. I said, this is a carve-out. It's different than a divestiture. Divestiture is an intact asset that can stand on its own largely. Carve out is a bunch of functions that are part of an asset. It's like a jellyfish. Things are moving and you don't really have a stable foundation. And what's your new ERP platform? Okay, we figured that out. What are you going to connect to the front end of that? From an opportunity perspective, are you going to keep the one that comes with it, with the ERP, or are you going to go somewhere else?

57:31And then what about the lead system? And simple is better, but simple is hard. I've learned a lot in this process about how simple is better. because everybody wants to customize everything. And that's when you end up having to extract yourself from that. You're like, we absolutely shot ourselves in both feet and both temples, highly customized and everything because that's what they wanted, whoever they was on any given day. It's like simple, simple, simple. Do not customize. It's really straightforward and really hard to do. This has been a great conversation. Thank you. Thanks for taking the time to host.

58:04I learned a lot. You've helped me become a better M &A scientist. Those of you still listening, thank you. Always love feedback. Hit me up on LinkedIn. Let me know what you think of this interview. I put a lot of effort to do these in person. So whatever my TNE that I get questioned about these days from the leadership team. Until next time, here's to the deal.

58:26Thank you for taking the time to explore the world of M &A with our podcast. We love hearing feedback. Tag us on a LinkedIn post, add a review on Apple Podcasts. We'd love to hear from you. If you need help standing up an M &A function or optimizing one that you already have, we're here to help. And if we can't help you, we probably know someone that can. You can reach out to me by email, Kisan, K-I-S-O-N, at mascience.com. Or you can text me directly at 312-857-3711. If you just want to keep learning at your own pace, visit mascience.com for a lot more content and resources. That's where you can also subscribe to our newsletter.

59:16Again, that's mascience.com. Here's to the deal.

59:30views and opinions expressed on mna 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