Strategic M&A Framework: IFS's Acquisition Playbook with Rachel Hindley

24:07Integration, typically, as I said, we're not This is why we're not a high deal flow team. We look at four to six deals a year, slightly increasing with the level of ambition. But realistically, why that is, is because we typically integrate. We are a strategic acquirer. It's all typically to enhance our current offerings for our customers so that we can sell more into a broader set. On that basis, if I look at our archetypes, we would always integrate product bolt-ons, migration cases, and typically market entry. Where we don't fully integrate, and an example of this was we acquired Poker a couple of years ago, and they are a smaller connected worker platform.

24:51That was our first foray into something that was more frontline worker focused rather than IFS is more about the asset side of it. In that case, there were two young guys that were the founders, really lovely guys. And we have kept them standalone, actually. So we haven't integrated them at all. The thinking was because it's not going to be necessary to integrate the product into IFS Cloud, we have a connector so that you can sell it alongside or bundle it with IFS Cloud. But you can also sell it standalone to their current market. It was thought that like they're relatively agile, like dynamic company, that sometimes that's better to hold standalone rather than overlaying larger behemoth of a corporate onto them.

25:32Obviously, the founders will feel it and the core management because they still have to report through to IFS. You get the beauty of being able to leverage IFS for all its go-to-market engine and scalability and knowledge. They utilize Sri Lanka to take on new resources. It's more offshoring. But they can still retain their a little bit more dynamic entrepreneurial style. And it's gone really well. So they're smashing their targets. I rarely hear about this. Usually, it's cut it off. They put the website, we've been acquired. who no longer are selling direct? I was checking in on them the other day.

26:05They're going really well and beating targets. And something like cross-sell is always really difficult. And most people will talk about this in software companies. It sounds good in theory, but it's quite hard sometimes to orchestrate just because you have to get the sellers aligned to actually sell the product. And it might be a smaller company. So if it's a smaller company and it's lower ARR, are these sellers who are incentivized to hit their quotas going to take on a lower ARR product if they can do a bigger sale elsewhere. They need to align incentives as well to do it. But I hear that it's actually going pretty well and they are doing really well as a business.

26:40Striking the balance between staying standalone but then having like a parent here who can actually provide value to you and support. That's interesting. It'd be fun to talk to them because here's your organic path to growth that they had in mind. And then obviously you have a vision of how it's going to be creative with your broader ecosystem. And a lot of the thinking is always, let's focus on this new strategy. And then, like I said, that's how all these tales of startups getting blown up by large organizations happened. It's because of that. Small company can be fragile at that growth stage they're at.

27:12But I was curious as if there's so much more overhead trying to do both, where you're trying to maintain their current growth, but then also achieve the big drivers that you expected from them, from larger company side. I don't think so. You know, there are aspects to the setup. There are, for example, some third-party contracts or like into company contracts in place to make it arm's length, that it's definitely not integrated. But I don't think there was a whole other layer of overhead put on the business. More so, they've managed to, and there's probably a recharge in there, but they've managed to leverage IFS quite well as well in the areas where they were probably lacking.

27:48And there is the element like you picked up on there that there might be a different strategy that they were thinking about in their head versus there could be a strategy that IFS are thinking about and those two strategies long-term might be different. So that's something that they would have to be aware of because they've been acquired, like there's certain aspects to being acquired. For example, we help them with a separate track on M &A, for example. We actually do help them think about their own separate M &A strategy for poker and what would make sense for them. I talk a lot about buyer-led M &A.

28:21I'm trying to create some kind of cult movement. And a lot of it's just a lot of these podcasts and working with corp dev, they just see aspects. It's like, why don't we put this all together in a framework? And one of the pillars is connecting diligence integration. Because I feel like this diligence itself is the foundation for your integration planning. And I'm curious because you're coming from a large organization. I know you have a bunch of different work streams. How do you do that? How do you approach diligence on a company like this where it's smaller in size, larger entity, of your basis on the diligence and then set up for a successful integration?

28:54In commercial diligence, we have a point person for every work stream. And that person is, where possible, the same person on each of our deals. So there's now an M &A kind of commercial lead, usually on top of their day job. And where possible, that same person is the integration lead as well. And this is where things are really, we've refined it and it's getting a lot better, is that we have a pretty seamless approach to it now because all of the people who are involved in the commercial diligence have all the knowledge, all the insight, and then are the same, hopefully, set of people that do the integration.

29:32So ideally, there shouldn't be this gap where things fall through the cracks between the people handing off the deal to the integration team. And the function, it's the same person that's doing diligence and is responsible for the integration? Yeah. We try and make it fairly repeatable. For example, things like your underlying technology and architecture, back office related, and think on the support organization, because that's agnostic to a deal. Obviously, depending on the industry, then that's where it differs. It might be a different R &D product team, because if it's A &D, it'll be the A &D team, and there'll be an A &D go-to-market team.

30:06So that's where it gets more specific. But in general, across a lot of the work streams that are standardized, it can be the same person. And that is working really well because we try and run pretty tight deal timelines. Because we involve so many people in the process, we want to minimize the amount of distraction both to the management team of the target and to our organization. We try and run them quite fast, but people are like, they know what the process is. We have pretty standardized management meeting agendas. We only outsource the standard things of finance, legal, tax, insurance, because we integrate most of our deals.

30:41And because we are a strategic acquirer, not a platform roll-up, the people like product is usually one of the most important things in go-to-market. Those people have the most expertise in our business to be able to opine on it versus a third party because they're going to have to understand how it integrates into IFS. How does it fit with our current product? How does it fit with our current go-to-market? No other commercial diligence provider can tell us that we have the best expertise in-house. So it works really well. Keep it in-house because ultimately you should own the work. Yeah. This is one that I've been thinking about is like customer diligence where in some of the stuff, it's like looking at competitive products and there's like already this bunch of sensitivity about talking to the customers or engaging with them.

31:25I don't know if you've ever had any experience with that, like getting a third party to... So we always do VOC, voice of the customer, as part of our diligence. So we do two types. We do one typically really early on, which is more outside in. So we'll engage a provider that's, there's many of them out there now, but that works with identifying either customers or if we want to know about, get glimpses from past employees, etc. as to the business. So we do that type of diligence, which is usually super useful as long as you get a good 8 to 10 interviews. And then once we're in the process, we run a customer diligence as well.

32:04So we'll get the management or founder CEO to do the warm introductions and we'll ask them for their top, depending on the size of the business, but we'll ask them for, say, their top 10, 15 ARR customers. And then they'll have to outreach to all of those customers with a kind of warm introduction for this other app that we use with the guise of an operational feedback session to say we're wanting to get feedback from our customers. The customer doesn't know. They just think it's just, hey, we're gathering general feedback. Yeah, because it's warmed up by the management. Yeah, that's really effective because it is with a third party.

32:38So they tend to be very honest. It's not like they're like, oh, we better not say anything bad about the company. And then what is really useful as well is that unless there's something terrifying and we cut the deal, we package it up. And then when we've closed the deal, we give it all to management because it's really good insights into how they can improve. I just want one question on the survey. How likely are you to churn on the next renewal? Yes, we do. It's part of it. Our supplier will have it in their report and will list like red, amber and green around their likelihood to churn. This is cool.

33:10To me, this is one of the biggest things. And it's helpful actually here how you approach it when working on these kinds of software deals. You want to know the quality of revenue. You want to know what direction it's going, what churn risk is. Does it still apply with these mitigation deals? Because this is like another one where if you don't have a predictability on that churn for mitigation, it can really throw your model off. Oh, sorry. On migration. Oh, sorry. Yeah, migration. Migration. Yeah, so on mitigation. Yeah, I'm sorry, wrong. Migration. Migration. Yes, it's different because we can't ask them if they're going to migrate to us during a process.

33:47That's what makes it tough. Yeah. So like, how do you predict it? Maybe you got past experience to reference. Yeah. But that's one I've been struggling with. The way we model it is, I would say, fairly conservatively. And yes, we have, If we look at past experiences to levels of churn, it forms part of the case. So you will have a certain proportion of migration each year, then you'll have a certain proportion of churn, and then you'll have like a final churn because obviously the customers in five years' time that haven't migrated are pretty likely to churn. But then you get the uplift as well on the conversion.

34:17These cases, a lot of them, in reality, they are likely to want to migrate because they want to be able to use the functionality. we hope that's why when you model these things out it's like here's bolt-ons that are more defense oriented deals here's migration which is like you're betting on how much you're going to lose and then you have market entry which to me sounds the most interesting there's some clear cross-sell and uplift opportunities there there's a certain category it's like clearly better investments than others because I feel like everybody still wants a high valuation especially in software yeah but then it's that thing like I said product bolt-ons are so So they're actually really difficult cases for us to build because it is really hard to prove the value thesis.

35:00Having said that, there was one that we were looking at where it was just so clear that they were referencing it in loss feedbacks on deals. So where you have it actually referenced that this particular functionality is weak multiple times, even if it doesn't seem to make sense, it just becomes like, well, we have to get it. what we do is then we just, we state the number of deals that have stated this. And then you're like, you're losing X number of ARR because we haven't plugged that gap or we haven't got strong enough functionality. It's not the most exciting, like you say, I mean, doing a copper leaf or the loops is exciting, but they are still really important deals.

35:40And also just to consolidate the space sometimes, if other vendors are going to do it, you don't want to miss out either. They've all got their place, but I agree. It's more exciting to do market entry transactions. Wouldn't the deals get more, in other words, complicated but unpredictable the further away you get from your core? There's a lot of leaning in in the business. And that also means that there's a lot of executive lean in. Because when it goes to our go-no-go, which is essentially like the C-suite signing off on a deal, every single C-suite person has to agree. And that means that they have to understand and have signed off on what their work stream has said, either in DD or in the assumptions in the business case.

36:19So from that point of view, it's incredibly important that you have the expertise and then you have the executive to sign off. Where you get away from the core, obviously you have less expertise in the business. And that's where it can get a little bit more uncomfortable because we're used to having a lot of it being easier to say, I really believe in this. And then you can trust that that person understands why it's a good investment. once you get away from the core, that's when we start to bring in more third-party providers because suddenly we're like, this isn't, for example, AI in the loops.

36:54We didn't have a strong agentic level of expertise in the business yet. We've been investing in a lot, obviously, of resource and AI. So our executives wanted validation from third-party to say, okay, well, is this a defensible moat? Could this founder go off? We closed the deal. We don't manage to retain them. And could he go and build in his garage in three months? It's that kind of thing which the business, at the moment, we didn't have the expertise to opine on. So we need to go out and get that third-party validation. So know what you don't know. Yeah. I brought up revenue and customer because that's my big ticket that I'm learning right now, especially looking at that and diligence and bridging it over to integration.

37:31What's your big ticket in terms of really nailing down from diligence to integration, set up the deal for success? As in what's important from going from due diligence into integration? Yeah, or just in general with the deal, make sure you don't screw this up and things will go well. Integration. If you click into it, what does that mean? Yeah, it's interesting because I don't typically get involved in integration. Our team does origination through to execution. And then we are obviously involved in integration from the outset because the very lead from the outset of the deal, the overall integration lead starts with us and runs with us right from the beginning.

38:04They're there in the beginning. Doing the planning as well. And then they're quarterbacking all those work stream leads that are overlapping. Yeah, we co-lead basically the commercial diligence because realistically the integration head is the person that's actually going to be responsible for all those work streams going forward. So actually in a deal process, the corp dev team and the integration lead co-lead That's actually interesting. commercial diligence, which makes sense because that person is going to be the person taking it further. I would say in terms of the question, having seen and helping out on one of the integrations, it's so important to separate, and it might sound very simple, what systems integration is versus value creation.

38:46People talk about integration. They'll just say, and we need to do the integration. But actually, I think sometimes people are confusing what integration is. Systems integration, some people just think it's systems integration. It's like, well, our IT team run and project manage systems integration. That's integrating people, processes, systems, getting them on the email and all that kind of thing. Invoicing and the practical elements, which are very important. But the whole piece around value creation is really where you lose the value of a deal. You have a business, and this is what I did learn in the deal process, now having seen integration is that you go out into the business, we talk to go-to-market, we talk to R &D, we talk to everyone, and we build our business case around what can we do, how can we drive synergies, how can we do cross-sell, where are the cost synergies?

39:36and then you take that this case is signed off by the board. There's an executive sponsor who's accountable for the whole thing and then you move it and then we close the deal and then integration takes over. But if you don't have a slick value creation plan, which really is derived from all the points in the business case or how you're going to hit the numbers, you so quickly can lose value because our business cases, like I said, if you're talking about an 18-month to two-year turnaround around if it was loss making. You've got to really get out of the blocks pretty quickly. If you have to hire another 10 heads to help you sell, well, you need to get onto the recruitment.

40:14It's the value creation piece, which is where it's so easy to lose the value of a deal. And you'd know from talking to everyone, but it's momentum. So if you're out the block slow, it's not the first year because usually there's momentum in their own pipeline, etc. But if you're not putting in place all of the things that we wanted to do to drive the business case and to hit the numbers two years out, that's where you start running into trouble because you have to be on top of what each person, what each work stream said they were going to do. And it's all good that we talk about it during the deal.

40:46And we're like, yes, we'll do that. We'll drive cross-sell this way and we'll get these people and we'll get this team to help sell that. And then you're like, have they started doing that? No, they haven't. It's like the integration plan really needs to be built around this North Star of what the value creation, I guess, vision is. It then turns into an executable plan of the integration plan. And then you have your tactical stuff you got to do. I hear the stories of people getting lost in integration. It turns into the checkbox activity because, hey, I downloaded this template off the website on how to integrate a company.

41:20This is what we're doing. It's literally driven off what is in your business case. You can't just get a template and say, this is what is a successful integration. What did you say? How many deals did you say you were going to sell? additionally next year and how are you going to sell them and what do you need to do to get there to sell them and that's what should be in your value creation plan you have that part of value creation plan which drives integration plan i'm curious about the cultural piece because we haven't brought it up yet and it comes up in every conversation how do you look at that part of it is there elements or just considerations around that part does that affect how you integrate a company.

41:58Oh yeah, for sure. And I use that example with poker. They were young. We wanted to retain their, they were in Quebec, like very different culture. Where you want to retain the people in the business, you have to be very careful, obviously about culture. It's like common sense. I'm sure some people were, if you're going to remove half the business, you're at risk of removing the culture anyway. But the loops is a good example. So they're a Silicon Valley startup. up. That's like worlds away from someone like IFS. And I was talking obviously to the founders every day and it's such simple things, but I was very cognizant of making sure that it was super important on this deal that we retain the team, the R &D team.

42:41They're mainly an R &D team in agentic AI. We needed all of them. One of the first questions, other than there's the whole retention side around the monetary retention side, but that's not enough usually for these types of people to retain them. It's like the way that they like to work. So there was really seemingly simple things, but important to them. So we allowed them to keep MacBooks. We don't have MacBooks. I mean, it sounds silly, but it was super important. Imagine having to make them go onto a Dell laptop. I mean, it would change their way of working. It's so true. I remember I had a vendor and during the process, they got acquired by a big top 10 tech company.

43:19And it was funny because I'm talking to the sales rep, our account executive, I was just curious, how's the integration going? And he was like, this and that. Then they finally opened up. He's the one thing that pissed me off was they took away Slack. And I asked him, I said, well, do you think it impacted productivity? He's like, huge. We religiously use Slack. Now we got to use this other crap product that everybody hates. Yeah. And people don't think about it as something that's seemingly simple. Because you'd be like, of course, you just integrate the system. But if it changed your entire business's way of working for a small company as well.

43:49So we were, yeah, things like MacBooks. Even things like tooling. Obviously, we can't allow the whole, you know, the whole of IFS isn't able to just use whatever tooling or go and get trials of tooling to use in product. They were used to being able to do that to enable them to work quickly or efficiently. Or they were obviously in that world. So they could be like, oh, let's trial this new product, new tool. So to a certain degree, we have to, within the, there's a bit of complexity around obviously making sure that the security protocols are there now that they've been acquired, but allowing that as well, which is different to the rest of the organization.

44:28But it's like you're still asking them to do a really different type of piece of work. So we were, for that, cultural retention of culture was so important. And I always make sure, this is one thing I do make sure in deals, is that we stay close to, particularly in founder-led deals, You stay really close to the founders that you're dealing with because there can be a lot of confusion. If it's their first rodeo, for example, then it's all new to them. Usually they should have a good advisor, but it's just things can be confusing. I don't know. They need to roll a certain amount of their shares into IFS equity.

44:59Do they really understand it? We bring in the expert and the equity to make sure that they understand it. You don't want to feel like you don't know who to talk to or like this, but it was confusing that someone told me. But you also don't want 50 people coming at them either. So we try and make sure that we keep it streamlined and they know that they can ask us anything really and approach us and say, I need help with this. I think it helps avoid confusion where they don't know what. For example, she was like, oh, what can I communicate out to my employees day one? It's all that type of thing.

45:27It's just making sure that there's like continuity and transparency, basically. There's a lot. You have to be mindful with culture and that's going to help shape how you integrate the company. There's going to be some trade-offs there. Your company is very distributed. Where was the company founded? Sweden. Sweden. It was an interesting story because it started with three guys from university who pitched a tent outside a nuclear power plant in Sweden. And they were asked to do basically set up their really initial basic asset management system. So they just slept in a tent next to the power plant.

46:03And that was the beginnings of IFS. So we do say that we try and obviously as a business gets larger, it's difficult. and you grow globally. But we do say that we try and maintain that original kind of entrepreneurial spirit, like the resilience, grit, is like some of our core values. And I do think it resonates. People are always willing to lean in, get their hands dirty. And I see that with M &A, like super supportive, always giving you time. And this is senior executives as well. Resilience, grit. The Swedes are always friendly. Is that part of the culture too? Friendly and forward, maybe. Yeah, and they holiday for the whole of July.

46:40So that's handy. I know. I met a lot of them when I was in South of France the last couple of weeks. I'd like to do that too. But no, we still have a strong Scandinavian presence. But obviously we have a large amount of employees in Sri Lanka now as well. Companies diversified. Is your M &A team diversified and decentralized as well? No. So we are pretty much a UK-centric team. Actually, a lot of the executive team are UK-based now. Got it. We obviously sit closely to them and the inorganic strategy of the business. We do all of the deals globally. To be fair, we do a lot of North American deals.

47:14We orchestrate it all from... Wow. All central here. Yeah. That's interesting. That's a whole other interview for us to... Maybe even actually a group. I can think of podcasts I've done where it's completely decentralized to very centralized to in-between. Yeah. We have to pick that up. We do a quarterly head of corp dev conversation. would be a fun topic to break down. I know, because I can see how there would be benefits to having North American-based people. Having said that, I don't know how teams work, but we have, for example, our core support functions, they have legal, tax, finance. So we have a North American tax person who then supports us from a tax perspective.

47:54We're not doing that. The thing I was curious about was getting actionability on these deals, if that was part of it. And I've seen it a lot with like roll-up. You're doing an international roll-up. You definitely have localized biz dev folks that are really sourcing it and getting the deals actionable. How does that work with your organization? Are you directly there talking to the founders and getting them to that point that they're ready to sell? Is it business unit leader leading that? Is it CEOs of the firm? Everybody? Get them on a Zoom call with 100 people? We do a lot of origination in our team as well.

48:28But that is another great benefit of three massive private equity shareholders is that our network is huge. They're all, that's a big part of their playbook. Exactly. I mean, look at how many, they would do it to all their portcows. How does that work in terms of pipeline? A lot of times a P firm has a pipeline that they're using to support their portcows. So do you have like three pipelines within the three different P firms, then your own? We have a monthly check-in with them where we run them through our whole pipeline, which is useful because if new things come on that we haven't briefed them on, often they'll say, oh, we know the CEO or someone knows the CEO.

49:04So it's just like the network is incredible for having three large PE funds. Okay, so you get intros. So we get intros through them. But obviously they do. I don't know exactly how it works because obviously they assess so many targets and then often they'll be like, oh, we decided this one would be better for you. They must sit there and decide which port cover would make sense for and then hand it down to them. So there is that angle as well. It's a big business. And I find, I don't know if you find this, that software is relatively incestuous, that a lot of people know each other. They've all come from the big ones.

49:37A lot of them are SAP or Oracle or Microsoft. So then they have quite a vast network as well. So people will come to us in the business and say, hey, I was at dinner with such and such from this company. Quite interesting. So we do get a lot of people that network within the business as well. And then obviously the standard bankers. And we're in touch with a lot of bankers. So we're well connected through the States, through North America and Europe. What percentage of deals are bank deals or in a bank process versus proprietary? I'd say lower in terms of processes for us of late. We much prefer bilateral.

50:13We call it buyer-led. Oh, buyer-led. Bilateral. Same, same. We much prefer it because obviously we have the chance to build a relationship. whilst we like to run deal timelines quite quickly. That's from the start of LOI, like pre-LOI, because we do strategic deals, we prefer to spend a bit of time being able to evaluate whether it makes sense for the business. So we as a team do quite a lot of work with our internal teams in the go-to-market and R &D, really evaluating whether it makes sense for us to even bid on the target. Obviously in processes, you're under a lot more pressure because you've got a deadline and you just have to decide whether to go in or not.

50:50After you've outbid everybody else, you're like, did I get the right deal? And then you're like, ooh. And you shortcut the whole diligence process so you can hit the timeline and outbid everybody else. And you're like, we didn't do any diligence. I just talked to a CEO of one of our customers and he was very adamant that he wants to spend a total of 12 months relationship building before he's comfortable to do that deal. I know. And it's so important. And we are spending less time face-to-face than we used to, which I think is a positive since COVID, to be fair. But I still think it's incredibly important to have the face-to-face at some point to build the relationship.

51:26You know, before it was so much easier to be like, hey, I'm coming in town. It'd be great to go meet up for a coffee, a drink or something. Now you just need to throw in as part of the process a Zoom call for an intro. Yeah. At least do that part to like, all right, if we vibe good enough. Yeah. And then, hey, I'm coming in town. Can we grab this? Yeah. Which I think everyone's used to that now. That was the one thing that surprised me moving to New York. because I was used to New York before COVID and you always just met people directly in person. That was it. Now moving there, that's the one thing that threw me off was even though you're literally five minute walk, you still do a Zoom call first.

52:01And then when you do meet up, it's almost like, hey, let's just vet out over a quick, you know, the 30 minute slot. Then when you meet in person, the quality is there. That's what I prefer. And especially if certain relationships with a private equity firm, a potential target. Yeah. You want to get to that point. That's where I was kind of curious about. How do you get these deals really actionable? Trust is obviously a huge element and it does take some time. One year is fair to say, I don't know what your timeline is before. And maybe it isn't. Maybe it's just more of frequency. It massively depends.

52:32Like I said, we tried to acquire Copperleaf for about two years for various reasons. Obviously, it's listed as challenges. So yeah, that took a long time. Poker, one thing that IFS does really well is that Darren, who was the previous CEO, Darren Rooves. He is executive chairman now. He's always been very invested in M &A and closely involved in a lot of the deals. And for example, with poker, it was a process. We flew the two young founders out here and Darren was there and he was CEO then and gave them the full IFS story and charm. it's also pretty impressive that the CEO of a large business is investing that time as well.

53:19And that's always been something that we've done with our current CEO, Mark Moffat and Darren. They will always spend time with the founders and management and invest. And that gives people a level of, you realize that we're serious, but also a level of comfort around it as well, that we're not going to be flaky or that we're not serious, basically. You got to spend the time to build the trust. You're flying them in. I was thinking about one of the PE firms when they invite you to the golf retreat. But not everybody's on private equity sort of model to do that. I think it's just to the time, the time to build a relationship.

53:54I don't think it's like a magic, whether you're going to the sport game or just hanging out or at the pub. Yeah, if you have time, I agree. And there are some types of deals where, yeah, for sure, we touch base every so often and we're building a relationship. but I mean you must see now like with AI and the way the markets the pace of the market is moving you don't have a year to build a relationship with a company in AI if you need that functionality like you I said maybe you turn up the frequency saying hey I gotta call hey you know what why I come out in a couple weeks and let's spend some time and we did this with the loops like we came in it wasn't a proper process but they were talking to some people and we came in fairly late.

54:34We also, again, we delivered a vision to them. We didn't just say we're interested in buying your company. We, and this was again, Darren and Mark articulated what it would mean for IFS and what they could be part of in IFS. It was incredibly important that we retained them in this deal. And one of the founders is, it was his seventh business. So there was a fair amount of risk that we wouldn't be able to redeem. But they ended up really excited and bought into our strategy for their business, which was a different strategy to what their current strategy was. But I think by involving them, being transparent, bringing them along on the journey and asking for their advice, basically, because they were experts in something that we weren't, that makes you feel part of the process rather than I just want to pay this amount of money for your company.

55:28That's an interesting point where a lot of times you think according of pitching and just, hey, here's this vision I have, how we can grow together, but also being very open-minded and learning from that company, then getting a sense of it that, hey, there's actually reception for me to get heard, to make a difference and what that could look like. And make you kind of reflect on the pitches that I've received from different investors. And you don't feel that this is like a real two-way relationship dialogue that there's going to be influences on both sides. Yes, because otherwise this is still like your baby, like most founder-led businesses.

56:02So you don't want to feel like they're just going to rip it apart. You're just following their playbook and trying to execute. And that's, I think, like a founder's fear is like you end up with a job. Yeah, exactly. And are people transparent about what that job's going to be? And particularly for the loops, like we went out to Silicon Valley in the core deal team And we hosted pretty much just more workshops rather than, I mean, they're very young companies. There's only so much due diligence you can do. But what was more important was working out what we wanted to do with their product. That wasn't even set before we went.

56:36And then you could see the team collaborating with them to reach a conclusion, which maybe they hadn't really anticipated themselves. themselves that basically, actually, we came to the decision that it didn't make sense to continue on their go-to-market strategy. Had we not done the workshop and discussed it and everyone was just contributing as much as the next person, because they're coming into the business as founders, they're actually coming into IFS. They have to roll a meaningful amount of their shares into IFS. So they have to be fairly aligned with where IFS are going in the strategy.

57:12This is all pre-LOI. No, this is post-LOI. Oh, post LOI. You're still continuing and having these like strategy workshops to... Yeah, this was like strategy DD workshops to work out. Basically, it was a bit of a more difficult business plan to put together because you're creating something completely new that we didn't have a playbook for. So neither thing to be able to help us. And then they're at least vested in to go execute on the agreed upon plan. Yeah, it was super important. I love how we went backwards on this interview. We went from completely backwards. We talked about the investors.

57:45We talked about integration, diligence, and making the deals actionable. Completely backwards. Usually it's followed the timeline. So that's fun. Hey, Rachel. So when we look at just the whole market and how things are evolving, how does IFS adapt its M &A strategy itself to stay ahead in a just fast-moving software industry, but also the whole ecosystem seems to be moving pretty quickly with AI and other changes? Yeah, it is. And we're definitely seeing that at the moment, our acquisition of the loops was one, it was much earlier stage than we would typically acquire, smaller. And with that comes more risk for a corporate and we're PE backed, not VC backed.

58:26But what we're seeing and what some of the PE firms that we talked to are saying is that because it's evolving and moving so quickly, it's almost like PE has to make some bets as well. It's not the same environment as it was. And I was talking to one PE firm that said, had I known what I know today, would I have made some investments that we did one year ago? And that seems like such a short amount of time, but that's how fast the market's moving. and so now it feels a bit more like you don't have time and you might have to PE, might have to be a bit more VC and make a few more bets and think, okay, maybe three of the six will pull off.

59:06Hey, before we wrap up, I got to ask you one thing. What's the craziest thing you've seen in M &A? To be honest, I haven't seen a lot of crazy, really crazy stuff in corporate development, which is good. I'd say a long time ago, I feel like the market's changed now, but I did see in a different type of world an executive walk-in and fire an entire team in the office in one day. So that was early. This is like part of a deal where you just close the deal and it's like everybody's fired. No, just a team. It wasn't me. You saw it firsthand that they came in and fired a whole team. How'd that go down?

59:43Was he yelling at them and just said, you're all fired? It was a very weird environment, to be honest. But yeah. We should go have a drink after this. I'd love to hear the rest of that story. Sure. Offline. Rachel, this has been a great interview. I appreciate you taking the time to have this conversation. You've helped me become a better M &A scientist. Great. And I've loved that. Thank you for having me. Those of you still listening, you're also a fellow M &A scientist. I appreciate you sticking through. I always love to hear feedback, especially from folks that can have attention span a lot longer than mine to sit there and listen to this.

1:00:14Reach out to me. I love connecting with folks on LinkedIn. I actually was at the hotel and somebody just shouted out, said, hey, Kisab. Good day. And it was so funny because I was with my daughter. And it was like… Because she does a lot of content with these. I see it on LinkedIn. You're famous. And that was so funny. It was with his family. And I had a few other times before. Randomly, I was in Miami with my son getting gelato. And somebody… Like I recognize you. So I thought it was like so funny. Did you think you were cool? My son didn't. Maybe my daughter does. But she doesn't let… I feel like she's 14.

1:00:46So… She finds her way to make a point. Yeah, you're not that cool. No matter what. Please connect with me on LinkedIn. I love getting feedback and the criticism. I take it. I'm looking to get better at this. Till next time, here's to the deal.

1:01:12Thank 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. podcast. 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.

1:01:56Again, that's mascience.com. Here's to the deal.

1:02:11Views 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.