The Back-Office Surprises Nobody Warned You About When Going Global

22:28So that's just a little bit of background to explain why we had to create our own India legal entity. And in the process of doing that, then we had to do some work called an amalgamation to basically dissolve the India entity and create our new one. And that again is timed to happen at the same time that we go live in all of our systems. That gets pretty challenging when you're working with bank accounts. First of all, we have a global banking provider. And even though we have a great relationship with them, you have to still go through this KYC process, know your customer with every new bank account that you take out.

23:06And that's a very lengthy process. Once you take out that bank account, then you have to do a bunch of configuration to integrate it in with your ERP systems and other third-party applications. And then you have to do a whole bunch of testing.

23:21Jennifer Lipschultz:the certifications are why you sign up the platform is why you never leave everything lives on deal pilot and it's not a video library you get all of our content including the stuff we've never put out publicly extended cuts extra courses the good material that never hit the feed and the artifacts this is the part i'd pay for alone tons of templates and tools across the whole library, a framework for every stage of the deal. You don't just learn it. You leave with the thing you need to go do it. Here's my favorite part. You can search all of it with AI. Want everything we know about earnouts? Ask, and it pulls from 400 interviews in seconds.

24:05Jennifer Lipschultz:You can even build your own course on any topic on demand. It's an on-demand advisor. You get answers, but the answers come with the receipts. You see where it came from. You see who said it. This isn't a chatbot making things up. The best practitioners on earth, on call. Mascience.com Tough to make those kind of changes. It's not like here in the U.S. where you can go in an hour and get things done like that. Yep. Swedish expense reporting. You said you needed a PhD to break that down. So we work with Concurb. And at the time, they had some very nice articles that they made available on their website.

24:47I tried to find them fairly recently, and I couldn't as easily find them as I could a couple of years ago. I was really grateful that they had this documentation, and I happen to still have it downloaded. So in rereading it in preparation for today's discussion, about half of the hoops you have to jump through when you're doing employee expense reimbursements in Sweden, and I've noticed some elements to this and other countries, but Sweden, as far as my experience, is front and center in terms of some of the most challenging. About half of the requirements have to do with when you go out to dinner or you're getting a rental car, if it's in country and you're paying that tax, the company that you work for can put in submissions to reclaim that tax.

25:34So about half of the challenges and the documentation in Sweden with expense reimbursements has to do with properly documenting the VAT taxes was paid so that you can recover that at the end of the year. The other half is all about, there's some government per diems that they specify whether you're traveling domestically or internationally. Okay. But then they break it down further. On your day of departure or your day of return, you get a portion of that per diem based on what time of day you leave. And if you are going internationally, whether you get the domestic per diem or the international per diem depends on in which country you're spending the most time.

26:17Furthermore, if the company you work for, let's just say the per diem rate from the government was 105 US dollars, the equivalent of, and that's supposed to include your meals and your hotel. So that's not going to take you very far. So if your company says, hey, you know, If you spend$300 including your hotel for the day, we'll reimburse you for that. But the delta between your$105 and$300 is taxable income. So there's just a lot of these very specific rules that you have to follow with Swedish expense reporting. And companies like Concur exist to help you through that. But once you get it set up, then you have to maintain it all.

26:58And then there's all this reporting you have to do to the government, which is an added expense that you layer on top of your daily operations that wasn't necessarily expected.

27:06Jennifer Lipschultz:So as an employee, my reimbursements become taxable income? Yep. If it's above the government per diem. Wow. At that point, you'd want an expense card. Yep. Oh, and there's another element to this too. If your hotel pays for your breakfast, or if you go into the office and your lunch is paid for, the per diem is reduced by certain percentages, 20 % for breakfast, 35 % each for lunch and dinner based on those meals that were provided to you. That's interesting. It sounds like there's a lot of surprises, unique challenges. If you're venturing and doing acquisition in a country you haven't done a deal in, When you look at just firing in a country that you're already operating in, does that necessarily make it automatically easier?

27:53Not necessarily. We've had some experiences in Europe and also with India where we had to do something called harmonization of benefits. So the difference being in the U.S., if you, Kisan, were to join ECI as part of an acquisition, we'd say, great. We'd look at your company's benefits. We'd look at ECIs. if there's a disparity between them in the favor of the acquisition, we do some sort of bridge. But by and large, you'd have to move over to ECI's US benefits. In Europe and India, however, there are employment agreements that are signed and they lock in what your benefits are legally. When we had acquired that Netherlands company in 2019 and then the next one in 2023, those companies had disparate benefits plans.

28:41And we knew about this going into close. This was not a surprise to us. But let me parlay for a quick second. We had an opportunity to decide that we were going to keep the existing acquisition and the new one on separate legal entities. And had we done that, we could have kept them on separate benefits plans. But what we wanted to do with the new acquisition is actually move those employees into the same office that we already had from 2019. By putting employees under the same roof, it creates a lot of friction if you have people working side by side that are on different benefits plans. So because we made the financial decision to close all of the offices for the new acquisition, move the employees into our existing facility, we knew that we were taking on this harmonization of benefits plan and project.

29:28So what that required is we did get a third-party consultant to help us through that process and provide guidance. But ultimately, we had to decide what the new benefits plan was going to be that was going to apply to all employees. Then that existing company that we had in the Netherlands had a works council. We had to get them involved in reviewing this new benefits plan that would apply to everyone. And then all of the employees had to sign new employment agreements with their new benefits plan. So there was a legal component, an NIHR component, working with the Works Council, engaging with a third party.

30:04That was an effort that we did in the Netherlands. And then in India, we had bought one company around May of 2025. And then we bought a second one in about September, October, and had to do a similar process of harmonizing those benefits between those two acquisitions as well.

30:21Jennifer Lipschultz:A lot of HR related challenges you had to overcome because even it sounds like work council and then you're finally like, oh, people like that's a big thing you got to really pay attention to ahead of time? There's a lot of things I really enjoy working about ECI. By and large, the majority of our acquisitions are centered on acquiring talent, acquiring products. By now, our company has about 70 different products. In fact, this background behind me, it is a picture, but from our acquisition wall. By now, ECI is 27 years old. I've helped acquire over 20 of these. And these are all squares or what the logos were at the time that we bought these companies.

31:00And when you have that number of products that we maintain, you need to retain the intellectual capital of the employees that know about these products. By and large, headcount synergies are not typically or generally part of our deal thesis. We are very much focused on our customers and maintaining and in fact, elevating the product development and the support that our newly acquired customers receive.

31:28Jennifer Lipschultz:That's a good point. So maybe it's pretty minimal. It's more like back office type of stuff you might integrate more directly, or is it looking at areas where you may want to do a production and workforce? No, a lot of what I focus on, we have a fantastic HR team and they take care of all of these, like the harmonization of benefits. And we have a fantastic legal team and they take care of a lot of those things. My efforts are really focused on getting all of our systems set up for this ultimate go live. So I work very closely with our marketing team to get our lead gen set up, to get the website set up.

32:02If we're going to be moving them to our website, we'll take a look at SEO and I want to make sure that we make a decision if we're going to keep their website or going to move their content over to ours. Work a lot with our operations, our SysOps team, making sure getting all the accounts and contacts moved into our CRM, working on the pricing strategy, getting all the pricing set up, which has two components to it. Most companies have changed their pricing a couple of times. So we have to set up all the legacy SKUs and pricing so that we can still invoice their existing customers. Then we have discussions on what do we want the pricing to look like going forward.

32:40So getting that all set up is probably, to me, some of the most interesting type of work. Then we have to move the support system, make a decision if we're going to be moving in the historic support cases. What are we going to be doing? Moving the professional services team into our PSA tool. And then we have a whole community portal and making all the knowledge articles and content

33:01Jennifer Lipschultz:available to the newly acquired customers to us. So that's where I spent a lot of my time is coordinating all of those different departments to get all of those systems moved over on whatever day it is we decide we're going to go do that. That's like the back end. Then you think of the front end, like the actual employee experience, because you are onboarding all these new employees from an acquired business that choose to come work for ECI. How do you sort of finesse and ensure they got a good experience that sets them up for success? A couple of things come to mind with that. One is to really try and show empathy.

33:36And I start off with most people take their cues from their managers. I spend my initial energy with a newly acquired company on the leaders of that company. Those leaders might, on day one, they themselves might no longer report into, say, the former CEO. They themselves might now have a whole bunch of new ECI managers. But yet, their teams are still generally reporting to them. What I do generally within the first few weeks of an acquisition is I take those leaders through what I call a change engagement session. And I walk them through all of the changes that they and their teams are going to see at ECI.

34:17I do that for a couple of purposes. One is, if you're an employee and you're looking at your boss going, oh, they're changing from Google to Outlook. They're changing from Slack to Teams. We're making all kinds of changes. you might be looking to your manager going, what should I be thinking about now moving from a Google G Suite environment over to Microsoft 365? So if you, the manager, were unaware of this, you're not going to be prepared to be able to answer those questions. So that's why I walk the managers through all of the changes they're going to see from beginning to end

34:51Jennifer Lipschultz:so that they can have those conversations with those employees. Then I ask those managers to rate each of these changes as I describe them as green, yellow, red. Green meaning what we have to offer is better. Yellow meaning its status quo. Red meaning is worse. Then let's talk about the reds. I can't do anything about the reds, generally speaking, but I can explain the why. So that's the second important thing when you're really trying to get employees who didn't choose to be a part of your company on board with the changes, explaining the why behind it. They might not agree with the changes, but if they understand the why behind it, that's going to go very far.

35:31And then the third element that I do piece on is after that initial change engagement session with the managers, I kick off every two week calls with all of the employees from the acquisition. And I invite an HR leader or two, depending on the org structure, to join those calls with me. And the purpose of those calls is to give them the roadmap of what we're doing from an integration process. I give them an opportunity to ask questions and I've gotten a lot of fantastic questions out of those sessions. When you're a new employee, you get started to get emails from individuals. In this day and age, you don't know if it's a phishing attack.

36:10You don't know who these people are. So I go through all of the corporate communications in the past two weeks and explain, yes, these you should be paying attention to. Here's the purpose behind these. Here's who this person is and why you should be paying attention to what they have to say. I try through those sessions to build a rapport and a relationship with all of these acquired employees by giving them an opportunity for two-way communication, hopefully making them feel like they have a voice in understanding what these changes are and why they're happening.

36:39Jennifer Lipschultz:I like how you frame this as a change engagement session. So this is where you're meeting the leadership team, you're talking to them, you're going over what are the changes that you're planning to make you're also getting feedback on these changes you have that green yellow red like on board if they got some things and they got some big concerns and you also the big thing one you want to get the feedback but you also like address why you're making these changes to really put that in there and then the other thing you also do is these all hands meetings every two weeks you have somebody hr included in there but then this is where you're going over the roadmap for the changes answering any questions.

37:17Jennifer Lipschultz:They got an open forum where folks can get answers, open dialogue, communication. Then you're also reviewing the comms that went out so that there is some clarity. I guess this goes back to our theme earlier about the multi-touch points on the communication. Does that sound right? Did I get it all? You did. You got it all. All right. I got a couple of good frameworks out of you today. We kind of got the ideas moved from partial to full integration. and now we're sort of like setting up the day one part of it. Your value prop is scalability, but what bespoke processes go away? How do you deliver that without blowing up trust?

37:54That's a really nice follow-up question to the last one. A lot of these small companies that we buy have very bespoke processes and systems. A point of conflict that happens quite frequently is within their CRM system, they have a lot of very unique fields of data that they're collecting. I don't have a place with that data in our system. I have to tell them, and we're not going to have a place to put that data in our system for a couple of reasons. Number one, scalability. As I mentioned, we have 70 plus products. We're in 80 countries. We cannot, if we acquired our 71st product, we're not going to be putting in processes and data fields for one 70th of our customers.

38:44You have to give them time to go through that process themselves. And while I might give you as much information, I can give you as much of the whys, but you might go through that change process in three days and decide you're on board. Your colleague might need two weeks to go through that process and absorb that information. And allowing people space to get through that on their own rates is one of the most valuable things that I've learned in the past seven years.

39:10Jennifer Lipschultz:You seem like you're pretty good at like sort of intermediating and figuring out a good common ground. I wanted to get a sense of that, like from your experience, because you've done this, I'm sure there's a whole learning journey that you've personally gone through. I want to get a little bit of that secret sauce. I hear so many of the other stories, these integration gone wrong, people want to blame culture all the time. But I'm like, there's a fundamental breakdown of communication that happens. You can't just say it's the culture. I wanted to get a sense of What's your approach that you keep this together?

39:37Jennifer Lipschultz:And you're mentioning some of the good elements when you talk about empathy, you talk about these really driving in the why and these elements. And I just wanted to just hear that. I'll go back to that change engagement session that I mentioned. And there is another reason why I feel that those are very important. And especially if I can hold them in person, that's where I started to build relationships. I know what's coming for these leaders. I know what's coming for these acquired employees. If I invest in that relationship capital upfront. It's a lot easier for us to have a real conversation three months down the road and say, Hey, listen, I got to take away these data fields.

40:13We've got to change your processes. You're going to have to start working in these new systems. It's a lot easier to have that conversation if you already have a good relationship with those individuals. So I'd say that's really maybe my secret sauce that I try to really invest in the people so that they know I'm not just some person from corporate coming down on high that isn't paying any attention to and doesn't care about their existing processes and systems. I try to show empathy for what their existing processes are. And I try to show them the bridge of what they're going to have to follow if they want to be successful here at ECI.

40:50Jennifer Lipschultz:So 20 plus integrations, what are corporate teams still underestimating on cross-border deals? The amount of effort it takes to stand up new languages. There's a lot of global companies out there. And maybe people are thinking, especially in this day of AI, that you just push a button and you get everything translated. But as I mentioned previously, I was pretty surprised at the number of edits that we had to the machine translations that we got. And the fact that there's so many different systems that we have to get stood up in those languages and have it all happen on the same day. It's a lot of coordination.

41:27I work with a terrific group of people here at ECI, and there really hasn't ever been a challenge that they haven't been up for. When and if we get the opportunity to introduce one or more languages, I know that I have a great team that will work together with me to make it happen.

41:44Jennifer Lipschultz:Yeah, that's true. The language thing is huge. I remember just doing a new customer and having to accommodate for it. So senior leadership team says, you'll figure it out. How do you make that cost visible? And that's another one, I think, you just think of like cost of integration that I'm sure you've seen evolve in terms of how you handle it. But I'd love to hear about that. I have a real great benefit of being able to present to our SLT monthly. That is a gift that they have given me at their time. They are a terrific group of people. They listen. Well, I send them a pre-read first. Some of them, if they can't make it, will send me questions in advance and let me know that they can't attend and will correspond on their elements through email.

42:29But during the meeting, they come prepared with questions. If we get into discussion about something that maybe I know the 50 ,000 foot level of it and they want to drill down a level deeper, they're right there on Teams and they're immediately reaching out to folks and trying to get the really, really, if you will, behind these things that I'm sharing with them. Ultimately, all of these surprises that I've mentioned thus far, I'll share with them and I'll share with them the solutions. If there's incremental costs associated with it, that's obviously shared in these meetings as well. And by and large, as I've mentioned before, there really hasn't been a challenge that we haven't been able to overcome.

43:08It's a team effort between the folks that are working with me in the functions and our senior leadership team. We've been able to get it all done.

43:17Jennifer Lipschultz:To the seat of the table. Yep. Is there something like there's probably somebody listening to this that is like, I wish I had a seat at the table. Is there anything? I know you're gifted to it. Is there a way to fight and get the seat at the table if you don't have it? One thing that I advise particularly younger folks in their careers, Rome wasn't built in the day. So if you don't have a seat at the table, and if you don't have the ears of, say, your senior management, and you feel like that's important, decide that it's a marathon and not a sprint. And decide how you want to build your street cred.

43:51decide how you're going to build trust. And maybe you pick one leader and then you grow that to two and then you grow that to five and then you grow that to the 12. I just kept doing a great job at doing the integration work, built a very good name for myself. And then it got to the point where I was asked, Hey, you should be reporting on this every month. All of us. It was like, you got it.

44:15Jennifer Lipschultz:One of the things I thought was interesting, you mentioned that you opened up everything in the data room. Can you tell me, well, besides why you do that, but I'm sure it's a good thing to do. But like, can you tell me a time where I actually made a real difference on a deal? They put a lot of effort into that. And if they feel like people aren't reading it, gosh, darn it, I'd be pretty angry too. So that's number one reason why I go and really open up everything in the data room. But number two is especially after seven years, I kind of have a list of things that I look for, some things that I want to keep my eye on.

44:46I guess the third reason is you never know what you're going to find. But one specific example that I can give you was, I don't spend a lot of certainly tax stuff, articles of incorporation, a lot of financial stuff. We got teams that take care of that. I will open up the P &L and I'll just look at the expenses and see what's in there. And in this particular case, I saw something on there and had a kind of a funny name to it. I thought, what is that? And I realized I'd seen that name in a list of logos. And it caught my eye in the list of logos because it wasn't interesting. It wasn't the name of the company.

45:20So then I went back to the data room and I'm searching on this term. Come to find out that this term is how they branded their biannual customer conference. This is material because ECI has a biannual customer conference. And in particular, if it's in a year in which we have our conference, then we need to have a conversation about, have you committed? Have you sent out invitations? Have you signed a contract with the venue in which you're going to be having this? Because if we can, and if you have it in their budget, that's an easy synergy that we could just say, hey, we're going to mix your customer conference.

45:57We're going to invite them all to our conference. Or if they've already committed to it, this is material because then we have to get into a conversation of who's orchestrating this. Is this work now that we have to ask our trade show team to now take on? It might sound like it's pretty much in the weeds. And it certainly is a material to whether or not we're going to buy the company. But from an integration perspective, which is my swim lane, these are the things I have to pay attention to because I have to care for all of these details and make sure that all of these different functional areas are talking to each other with respect to things like a customer conference.

46:29Jennifer Lipschultz:Those are great things to pick up on. And one, you can build in your integration plan and actually get some additional value. Yep. What does a pre-closed global integration checklist look like for an SMB acquirer? So pre-closed, to kind of summarize some of what I've shared here today, and I haven't really hit on this a whole bunch. I mentioned doing some of your homework beforehand. You can look at employment laws in a new country. You can look at potentially what are taxation requirements, employee expense requirements. You can do that homework yourself. AI is certainly going to be a tool that you can use in a more conversational manner to ask it to help you understand what are some risks?

47:10What are some challenges if I'm doing business in a country for the first time that wasn't available to me through most of this time? So I would say, number one, that specifically to build on some of the things I've mentioned here today, if you're going into an existing country, don't take your experience with your existing acquisitions to be that 100 % represents the experience you're going to have with a new acquisition. There might be different language skills. The harmonization of benefits is certainly an area to consider. And if you're going into a completely brand new country, I mentioned employment laws are certainly important.

47:47The plan for taking out new bank accounts, I don't think we spent a bunch of time on and certainly credit cards. We've been surprised by some requirements around the length of time to take out the bank accounts and what's required for credit cards in new countries. Data laws. We've had some great legal team and IT experts who have been aware when you go into new countries, based on where the servers are located, you may or may not be able to have customer data. You may or may not be able to have employee data on servers in different countries. So that's something to take a look at. Just your overall language strategy, which should really mirror your go-to-market strategy and what your language is going to be for communicating with employees.

48:31And then ultimately, take advantage of your external legal counsel to help. You can go to AI, you can go to Google, you can look up these things. But at the end of the day, those are nice to help you understand what questions to ask. But rely on your external legal counsel to really provide the end-all, be-all guidance.

48:48Jennifer Lipschultz:Prepare for the unknown. Yep. Jennifer, what's the craziest thing you've seen in M &A? This isn't necessarily crazy, but I think it's a nice parting comment. I'm kind of a small statured person. I like to think of myself as having an approachable personality. That second company in the Netherlands that we acquired, and I went to all of the facilities, and I made it a point because I wanted to not be this scary person in the US. I'm there to meet them. I walked to every person's desk and said, hey, I'm Jennifer. Here's all the things that are great about ECI. Do you have any questions? It was easy because it was about 100 people in six offices.

49:25I could prep the night before and try to remember people's names and faces and really try to have a conversation with folks. I came back to the States and not only did I learn that folks didn't understand English as much as I expected them to, I was told that approaching people's desks as this woman from corporate, from their new corporate parent company was threatening to some people. And that was the absolute opposite of what I was trying to accomplish. I'm trying to be that bridge. I'm trying to be Switzerland. I'm trying to be the friendly person that you can ask questions to. And the last thing I wanted to do was scare people.

50:07I'm standing at their desk and saying, hi, I'm from corporate. How can I help? that really helped give me a perspective of sometimes your best efforts and your best intentions aren't received the way that you intended them to. I'm sure there's some people that were really happy that I stood at their desk. I can't make them all happy. It's given me more of a sensitivity to how to approach these acquisitions and not necessarily making assumptions because I would like to meet somebody from my new parent company and have a conversation with them. Not everybody is necessarily of that mindset.

50:45Jennifer Lipschultz:Yeah, that's a big thing. Like a big cultural difference too is perception and signals and the way things can be interpreted. I can go in a lot of different directions. So more preparing for the unknown. Jennifer, this has been a great conversation. I appreciate you taking the time helping me become a better M &A scientist. More than happy to help. I really enjoyed talking to you, Kisan. and I hope that this information is really beneficial to your listeners. Thank you. Fellow M &A scientists, if you listen this far to the podcast, I want to hear from you because I don't know how you do it. Connect with me on LinkedIn.

51:19Jennifer Lipschultz:That's probably the easiest way. But put somewhere a comment or something that you actually listen to the podcast because I get tons and tons of spam every day. I would love to get feedback. What did you think of this podcast? If there's topics I haven't covered that I need to cover or just criticism, I get that sometimes too. I'll take it. I'm trying to get better in this day by day. Till next time, here's to the deal.

52:06Jennifer Lipschultz: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. Again, that's mascience.com. Here's to the deal.

52:49Jennifer Lipschultz:Views and opinions expressed on M &A Science reflect only those individuals and do not reflect the views of any company or entity mentioned or affiliated with any individual. This podcast is purely educational and is not intended to serve as a basis for any investment or financial decisions.