Developing Leadership in M&A

‍Text Version of the Interview

How critical is self-awareness as a leader? 

I'd say that has to come first, to be honest. Honing your self-awareness, your empathy, your relationship management. I think that's the key because you need to build trust. 

To be successful in M&A with all the complexities that come around with it, quickly building trust requires a level of self-awareness and empathy that you have to focus on to become a good leader.

With that self-awareness, most times, it gravitates towards recognizing your vulnerabilities and understanding that you don't need to know everything. 

But you need to lean on your abilities and strengths, mitigate the weaknesses that you realize, and help the team achieve the goals.

Vulnerability is hard for everybody. You don't want to acknowledge your vulnerabilities. And the reality is, whether you recognize them or not, other people see them. 

Getting the feedback, understanding where you have blind spots that we all have. It's the key to really rounding out your ability as a leader, that can be a technical side.

I also think about vulnerabilities from a leadership standpoint. This is one I still work on. I'm a kind of a big presence in the room. 

And when I'm in a meeting or leading a meeting with team members, I have to be conscious that I might drive things too much without intent, and I want my team to show off; my team's doing a lot of the heavy work.

Now, I need to make sure that they have a voice and they're developing. Making sure you step back and understand that you don't have to be the biggest one in the room at times. It's something else that I've become aware of over the years. 

How to Practice Self-Awareness?

Often, I ask for feedback, those who work for me or have worked for me. I got done with a meeting, and I wondered, what could I have done better?

Initially, when you're new to a team or someone's new on the team, they might have felt uncomfortable. But I think one of my jobs is to make them comfortable enough to give me honest feedback. 

I can't get better without feedback, and they can't get better without honest feedback; it has to be constructive. Don't be afraid of feedback; embrace it.

Vulnerabilities, I think we are all generalizing, but most people understand their key ones. They might not want to admit it. You might try to hide them. What you need to do is embrace them as well. 

Encouraging Criticism

There was a personality test that we did back in one of my prior companies with the team, and you got the team dynamics in there, and I'm one of those whose score is really high for ego strength. 

So that means that you can say whatever you want to me. And I might react like a flash in the pan, but it's over with, and your best friend afterward. Not everybody's that way. And you have to find the best way for your personality type to feel comfortable getting feedback. 

And then once you have that information, that's power, you can do things once you know. It's hard to guess what people think, and it's hard to guess the way that people view you. And I think that's just a key part of developing leadership skills. 

Use them to your advantage. When you know them, you can control how they're perceived by others better. 

Developing Trust as a Leader

Over the years, I've realized that everybody has different ways of approaching things. So I'll caveat everything I say today with, everybody needs to find their own voice.

I find being empathetic comes easier, but it's been that way since I was a child. And it's come from years of experience. This is all about practice. Through all the deals I've done, I try to be better on each deal. 

For me, it comes down to understanding the other party. What are their drivers? 

The only way you'll get that information out the other side is to build their trust when they share it. For me, that's coming in different ways. It's coming from in-person meetings. 

So I work on understanding them as a person, making them feel comfortable enough to share the information that I can use to help sometimes hypothesize or guess. 

But other times, I really hear from them. Where are they trying to achieve, apart from getting paid a lot of money? 

Developing Empathy 

Empathy is something that you can learn. Some people obviously have a kind of a natural skill easier than others. 

And you've got to find a way to be comfortable dealing with it because empathy is also like we've got to catch emotions. What kind of conversations do you have when you ask them in a deal context? You're making them feel comfortable about who you are as a potential acquirer or investor.

And at the same time, that makes it like a little bit of a quid pro quo. They're going to be sharing lots more information than you'll share with them. But you start it off by sharing a little bit about yourself. 

And that's the normal tactic that people use as humans to show empathy and gain trust, such a simple thing. There are so many simple things that I've seen over the years that I see companies or teams not do. 

Getting Alignment for Deal Success

It becomes even more critical when you're transitioning over to the integration side of it. 

We have implemented this idea that in the first week when we're on-site, the team cannot ask questions to the target company. 

They're there to listen because these people have been answering questions to us or other potential buyers for however long it takes.

No one's really asking them questions. So we implement that. So we just did a deal last year here, and that's the first thing we did. Today, the next day, you guys get to ask us questions. So you start to understand their issues because that'll help drive how you approach them. 

Accountability On Leadership

Leaders need to have this idea of having extreme ownership because the team's performance falls on them. That has to be the critical driver all the time. 

When something doesn't go the right way, what did I do wrong if the team fails at whatever it's trying to accomplish? So as a good leader in M&A, you step back. If there's a mistake or an opportunity for improvement, how could you have done differently? 

And lots of M&A professionals and I've fallen into this. You're too busy, and you don't have time for it.

But the reality is the team is never going to advance. The team will have a higher probability of repeated failures if you don't take that time to understand what you could have been doing better as a leader. 

The first rule of leadership is everything's your fault. That's the mindset you need to have as a leader. 

One of the roles of leaders in an M&A deal is to keep that strategic picture alive in everyone's mind throughout the process. 

So when you're getting deep into diligence, when you're worrying about integration planning, when you're heavy in negotiations, what's the ultimate goal?

Why did you start this process and staying on course for the strategic reason you created it in the first place? That helps you avoid getting fatigued. 

Keeping that strategic view, a high-level view at the top of your mind, and everything you're doing in the team process helps the team understand why decisions are made. 

Team Alignment on Strategy

It becomes a top part of slide decks and enforcing folks to tie diligent risk assessments and how we're looking at valuation, how we look at integration, the steps, the timing, needs to be tied to that strategy. 

Communication   

We have so many new ways to communicate with each other, but we don't communicate. Just give people the opportunity to understand everything you're communicating and make sure that you see that they hear you and understand. 

One of the worst things I can see from a corporate development standpoint is you walk into a room and assume your audience, internal or external. 

And you set your communication up as if they understand it, and you walk into there and don't take the time to communicate what went on fully.

You've got to listen first. 

Leadership in M&A Integration

We had to take the time and show statistics to know how important integration was.

When you show them prior deals that maybe weren't as successful as the company would like, that's where we started the decision to put an integration manager early in the process like at the time of signing an LOI.

They're not going to add much value. It's not about them adding value. It's about them hearing how you get to the deal closing. So they understand the key drivers, not only for you as the acquirer, but also for the other side's issues. 

Because that will help define how they will ultimately approach integration that turns into we'll look at integration early in the process.

Communicating the Strategy

What's going to be the story to the market, the customers, the third parties that will be involved in the acquisition, the target company, and your own potential customers who may not love that you acquired that company for competitive purposes or whatever. You also have your board who needs to understand. 

From an employee standpoint, you have two sets of employees. You have your internal employees, which I think sometimes people forget about them as well. Most companies find out about the deal because there's a public announcement. 

The optimal way is to have internal communication and set the tone for what this means for the company with this acquisition and expectations.

Target Employees

The same goes for the target employees. One key things is making sure that the senior management or any management staying on as part of the acquisition, to be part of that storytelling, and they've been brought in line with that earlier than the rest of the employees. If they didn't know about the deal, you haven't had an opportunity to build any trust yet. 

How to Communicate Effectively

Mastering PowerPoint. I wouldn't say that I've mastered it, but we spend a lot of time on our presentations. I always look at what's been done in the past, see where you can enhance that, and make sure you've got a consistent message to your senior leaders into your board. 

Also, I'm a big advocate of prereads. The apparent reason is it allows the audience to get up to date so that the discussions with folks that tend to have very tight schedules and not a lot of time, you can focus on the key issue.

You can't be assured that everyone's going to have time to preread, but at least you give them the opportunity. 

I loathe things where people throw information up on a page and then expect the audience to see what they saw and not have the self-awareness that if you've been working on a deal for two to three months, and they're seeing this information for the first time, they don't have anywhere near your view and understanding of the transaction. 

That's a lack of self-awareness. I think they're very smart people, but their impact on the audience could be different if they chose a different approach. 

Developing Your Team

First and foremost, they have to have an environment where they can fail. There's no growth in the comfort zone, you have to give the people an opportunity to be in a non-comfortable zone. 

But when you're trying to develop them as future leaders, they have to have enough training to make the mistakes you've made. You have to have people on your team who learned from their mistakes. 

If you have people on the team that will repeat the same mistakes over and over again, that's a bad sign. They don't like to admit when they don't know things. 

If you don't have an environment where people have an opportunity to step up and stretch, and if they fail to be coached, you can't have a successful team in the long run. 

Keeping People Motivated? 

Challenge. You have to work at it constantly and it's not a one-size-fits-all. I've got to understand and grasp what will help each of the team members be successful on their own. 
You have to have a diversity of thought and making sure that they're heard and respected that way.

You have to think of something new to keep them motivated, on deals, not every company's out there throwing huge closing parties and bonuses and everything else for deals. 

But for me personally, I still do things out of my own wallet to try to be nice and to recognize folks that have worked hard. I truly believe that they were, and they deserve some recognition for that.

Best Advice for Leaders?

• You have to find your voice. Everybody has their own voice for things. You have to find a way that works for you as a leader. 
• Don't assume that what motivates you motivates others. It's a simple mistake that we all can make.
• Trust is earned. You can't get it any other way, but it takes time and effort to do that.
  

In the M&A world, where time is never your luxury, you have to learn ways to do that more quickly, but how fast can you gain at least enough level of trust to be more successful in a transaction? 

It's not about you as a leader. It's about the team, and it's about the team's success. It is all those things. So you've got to have the team be successful, and that's a constant effort.