Evolving To Agile M&A at Scale

INTRO

I am here with Kimberly Baird, Corporate Development Integration Lead at Cisco. She has been in M&A for the past five years in Cisco. Also joining us is Ashley Rice, Senior Consultant, HR M&A at Cisco she also spent five years in M&A at Cisco. Today we'll learn how flexibility and adaptability drives better M&A.

So let's start with, how do your roles interact with each other at Cisco?  

Ashley Rice: It's a little bit fluid depending on the deal. But over the past couple of years, I would say the role Kimberly plays in the role. I play engaged very quickly with our core dev teams upfront.

So from an HR perspective, and all that, Kimberly talks to the integration perspective and planning. We're really engaged from the beginning of the conversation with our Corp dev team, through and to the term sheet. So pretty early on as a partner in the conversation. 

Kimberly Baird: It's funny how much it's changed in the five years that I've been at Cisco. When I started, it was a bit of a cold handoff. I'd get 15 minutes with the deal lead. 

Today, we are very much involved early on in early discovery-type conversations and questions relative to go-to-markets or financials.

What we think the key deal thesis should be and how we would realize value. Our partnership relative to the integration and deal team has really moved upstream quite a bit. 

That sort of relationship with the HR in our company, we call the people team starts at that point as well.

Kison Patel: That's interesting. In five years, things have really changed even more recently and you're more involved upfront.

When do you bring HR? How does that get queued up in terms of when you start executing a transaction?

Ashley Rice: Sometimes we're actually involved pretty early on in the deal sometimes before Kimberly and the team gets involved.

Because I would say that things that we've started to in effect prove our value around in those early deal conversations have been around really assessing the culture, the leadership team coming in, looking at organizational fit. 

And then some early thinking, driven from that organization discussion on what deal structure might look like. So when we're in the conversation about a platform, is it a tech and talent deal? Is it an asset deal? What does that mean to the strategy going forward? 

So obviously our lens is much more the culture, the leaders and the talent, but I think that dovetails nicely into Kimberly and the crew looking at what's the viability of the integration going forward? 

So it's looking at the opportunity ahead of us and what's the viability within the walls of Cisco if you will. That acquisition will work with the deal value that's being poked at that phase in the discussion pretty early on. Then at some point, Kimberly and the team come in and I think we very quickly start the partner on that conversation.

Have you seen a similar type of change just in the past, evolution, and how have you guys been evolving your M&A approach? 

Ashley Rice: I definitely think so in the past three to four years, HR has been in that conversation and I think it's because of the relationships we've built with the Corp Dev team in large part that has helped us to get there.

And then over time, I think the acquisition integration community has really put forward some solid processes and practices that have given a similar set of credibility. So the past couple of years, we've also really seen the integration community earlier in the deal as well. 

Kison Patel: Makes sense. It seems like a trend, whereas companies evolve the M&A function they've realized the value of integration and it tends to get brought up upfront in the process.

Can we talk about the value that HR brings in the deal? Both from an HR perspective and a corporate perspective? 

Kimberly Baird: The assessments that you referred to in terms of the organizational alignment and how it would look to realize the value from a people perspective. 

Also, I think from an integration standpoint, any hurdles that we might have looking at the profile of the company, where there might be some additional challenges may be because of where a certain company is located, their headquarters, some of their other sites. 

Then most importantly, I think looking at the culture, really taking a look at the culture early and looking at early indicators that I've found really helpful because the HR person is in more specific one-on-one conversations with the keys, for example. 

Whereas, I might be more preparing for diligence sessions and areas where you might be able to observe other types of behaviors in terms of how the CEO manages their team and who they bring in and how they interact when they're presenting in the course of diligence.

So putting those observations together early on about what you're seeing can really help set the overall strategy up for success. 

Ashley Rice: I think of those as more, the narrative that we continue to iterate on. So perhaps a little less tangible, no less important that we're consistent in feeding that information.

And I would almost label it. How do we start to understand the hierarchy of needs for the target organization versus how Cisco operates and what about that is going to make the integration successful or not? 

There are also the HR things that directly relate to the dollars and value of the deal. So we are looking at who are the critical talents, who are the tribal leaders that may not have the executive labels on them.

I think that's really important. And then designing the right retention and compensation strategies and then talent engagement strategies are starting to shape-up around those with key leaders on our side so that we can retain and attain that deal value. 

This is interesting. Can you give me examples when you say HR needs, what that entails?

Ashley Rice: The hierarchy of needs. Most people care about: Do I have a job? What's my compensation look like? But each culture of an organization also has a set of things that they categorize as important to the way they work on a day-to-day basis. 

So it could be the way they're organized is very transparent and flat versus a more hierarchical organization. And what is that going to mean to the governance of decision-making in our ability to move quickly or to integrate quickly? 

It is things like how do they value their orientation to customers or partners. And how do we do that in the world? So starting to shape the methods around what might we need to feed into Kimberly and crew as they look at their go-to-market plan. 

Each organization sort of addresses the DNA of how they do their work a little bit differently than our templatized version at Cisco or how we've done things. So they have to pay a lot of attention to that, or things can start to fall apart.

Can you give me an approximate time when you're starting to understand those needs? 

Culture is not a one-time snapshot in the world of M&A. - Ashley Rice

We are trying to get better at observing some of those tangible observable behaviors as early as we can. In initial conversations with executives, to see how they present, to see how they deliver their management overviews and start to get some of those early cues. 

And then we've built-in checkpoints just prior to diligence, just after diligence, and right around close as we start to do our day one plus 90 plan. So it's definitely building narrative throughout the process, not a snapshot in time. 

How do you identify tribal leaders? Cause I liked how you distinguished it from just org chart leaders.

Ashley Rice: You have those who are leaders by title and on paper, like your GM type capabilities. A lot of times, that's your CEO, COO types. 

And then you may have some senior leader, senior title, technical leaders as well, but you kind of have to listen for who else they talk about in terms of gateways to the hearts and minds of employees.

So there are people that sit within an organization that if they're not on board with a change, AKA an acquisition, you're not likely to be successful. So identifying who those folks are, who may not be apparent on an org chart as early as possible is really important. 

Let's talk about how the M&A process overall at Cisco has been evolving?

Kimberly Baird: What's changed more recently in the last few years has been a pivot to really focus on the outcomes and the value drivers for the deal. More recently, I think a more intense focus on just staying more agile and flexible to meet the needs of the business. 

As everybody probably talked a million times now about COVID and how it's affected our lives. The ability to shift and change and be flexible is so important. It's really important in M&A like Ashley was saying about this sort of evolving understanding of the culture. 

The entire process is evolving, so why wouldn't your plans also evolve as you go forward? - Kimberly Baird

So we've done some specific looks at how we can be more flexible, iterative. And I think that's been a key part of us being able to better partner with the likes of the Corp dev team, the HR team, and others because it's not a cast-in-stone type of engagement. 

Ashley Rice: I think Cisco has learned over time that inorganic growth through acquisition is a large and definitive part of our strategy as it is for many large organizations. 

And I think it's come to a realization that we've had to do a little bit of a reset in coaching the business of acquiring leaders through. And then that process by getting them more clear on strategy for the acquisition in the first place. 

It has driven us to look back at our AI acquisition, integration, planning, and methods to think about.  How do we align what we do, or the most important things that we do to those strategies? AKA value outcomes that we're trying to drive to. 

We've gotten much more crisp on our North star and then looked at our design process to ensure that everything we're doing on a day-to-day basis, the tools, the processes, the conversations. Are trying to get us from point A to that North star.

What prompts the change? 

Kimberly Baird: We've had some acquisitions in the last several years where there's been that lack of strategy alignment, because If your strategy is aligned, then the way you come together should be aligned as well. There could be things that we don't integrate and stay separate.

There are things that we do integrate because it makes sense for both of us, it helps accelerate value. And I think that's where we really had the learning. We sort of had this massive set of checklists and every function came with their checklist. 

We got an adverse reaction to that from some of the companies coming in and for good reason because it doesn’t make sense for what they were trying to achieve at that moment. That's really the inflection point that helped us understand we need to be doing things differently. 

Meet the company where they are and understand them better. And what's really going to help accelerate the combined value of the synergy is what we need. It happened over a series of years in acquisitions. 

Kison Patel: Sounds like, it's almost like part of it was some of the experience with some of those acquisitions and even, almost like a retrospective of looking back at those deals as well.

Kimberly Baird: You have to go back and learn. What was the reason for that? How could we have done better? And we do have a really strong learning process and culture. 

So we do spend quite a bit of time understanding why things happen the way they do, and then how to improve. One thing that has changed though, is we don't write all those things into practice, like, adding another box to check.

It's more like, if I have a similar type of deal, where do I go to learn the lessons from one like this, where you had similar challenges or profiles. 

What does agile mean to you? 

Ashley Rice: I think agile is an effect of what Kim really was starting to describe. In a company, the size of Cisco, and to get the scale that we get, which in large part is why we acquire. 

Because there's a diamond in the rough out there that we believe at our core we can help accelerate to an end game that's good for our customers, our partners and our ecosystem. That's the fundamental means by which we operate. 

So I think it is a matter of how do you maintain that scale and the compliance required to maintain that scale in balance with what do you do that's right for this acquisition, this business, in this particular model.

What agile has started to mean is how do we start to get to a clear set of lowest common denominators, where we can't change the game and really streamline that work. And I think those are places that we look at more automation, more rote practice, more capture the fact that it's been done or not.

And then the part that has remained more of a running narrative or an agile conversation is around the science versus the art. And it is the art piece, it's how do we design the integration practice as we go with the same North star? 

So the North Star doesn't change unless there's a reason to reevaluate that, but how do we then pick and pull from like Kimberly was mentioned what we know and maybe what we don't know or what we need to press on within our Cisco standard environment. 

That conversation has become much more facing forward. And I think the acquisitions that Kimberly mentioned have pushed us to go there as well as I think a change in our senior leadership team. 

Over the past couple of years has really given some new outlooks on how we should be acquiring and running our portfolios through acquisition. So we think those two things have allowed us to get to that 40% compliance and operate in 60%.

How do we design based on experience? So we're leveraging that knowledge base, but also. Ensuring that it fits the strategy. We're trying to drive for that acquisition. 

Kimberly Baird:  I love that you brought up leadership because I think that's a huge impact.The influence of leadership is immeasurably important here but, looking at agile as a practice, I spend a lot of years in engineering operations. So I tend to think of it that way you have your teams, you have your goals, your goals are your value drivers. 

How are you realizing value from the investment that your company's making, that you're responsible for making it happen? And then all of the aspects underneath that help you to get there are iterative. 

You set short-term goals, you help the team aligned to those things based on where you're trying to go. You move the ball down the field, and then you reassess and you get there a little bit at a time, quite frankly, and that gives you a chance to step back and reevaluate.

Are we going the right way? Did we make a mistake? Do we have to recover? What are the things that we need to be thinking about? It also gives you a chance to evolve with having for many of you that if you're in a large company, there are always things changing. 

Leadership changes, organization changes so many things that could impact the ability for your integration, in this case, to be successful. So I think an agile approach and sort of a shorter-term iterative approach is a much better way to go. 

There are challenges when you're trying to do that at scale. I think that that is where you do mean some level of governance. You need frameworks, people many times say agile and they think it means to throw the plan out the door and just go, and that's not at all what it is right?

It's actually a much more disciplined approach because you're constantly having to evaluate, are you doing the right thing and why are you doing what you're doing? 

Is it okay to have a willingness to rip the plan up if you need to?

Kimberly Baird: We used to have this big lockdown, this is the plan. And it's like, okay, that's not going to be successful. And we think about how fast the world's changing around us.

Some of our larger acquisitions, they take multiple years to get done. There are all kinds of changes during that time. So you can't expect that a plan is going to remain the same. You're lucky if you get six months nowadays, right? 

In my experience with agile, I find that you are constantly prioritizing. You have like, a specific regimen around doing that, how does that happen? 

Kimberly Baird: Every acquisition is different because every company coming in is different. So all the observations and things that Ashley's team is bringing to the table are going to help you understand how to work with that target company to come up with the best plan.

And sometimes they just say, Just tell us what to do. And then there are other teams are, they're like, we know what's needed in this market. We need to do X, Y, and Z. Here are the priorities and you adjust as needed.

Ashley Rice: I guess I would add two different things. One is that the structure to the point about agile, having some structure to it, the structure we have set up for the way the teams iterate on the work allows for a constant dialogue around, are we in the right space at the right time for a particular acquisition?

The other part that makes that difficult that we need to stay in tune with, which is a lot of heavy lifting, is the environment happening outside of the acquisition because some of us at M&A often get focused on the acquisition we're working on. 

When the way that acquisition gets executed and prioritized might play differently depending on what's going on in the ecosystem around it. So it could be a major market announcement. It could be a pandemic and requiring a different set of products to lead versus ones we're acquiring. 

It's the macro-environment that I would say we keep our eyes on or try to stay informed around. And then the iterative process that we've built into our practice that helps us adjust the course.

Kison Patel: What's interesting about your comment Ashley, it's almost like you're weighing back more on the decision-making process and saying that sort of the critical driver is based on all these elements of change. It's the fact that we'll enable quick decision-making to be able to respond and start acting upon it.

Ashley Rice: That's part of it. But I also think that's why there is beauty in the partnership with folks like Kimberly and myself. I approach it with a different lens, looking at organization governance, how that's playing out in the acquisition, the integration work, and what it might look like beyond that. 

And Kimberly has a huge insight into how we do go to market at Cisco, what our processes look like around sales cycles, and all of that. We all are equal players at this table that brings this kind of think tank to the acquisition and also has that macro-environmental view that weighs into that conversation. 

And then the other thing I would add, we talked about our relationship with Corp dev. I think we've also improved our relationships and credibility with our business leaders to bring us to the portfolio-level conversations.

You might see us being hugely acquisitive in one area of the business. And our focus is less like it was five years ago on the single acquisition and more on what does it mean for the overall portfolio and how we should be thinking or approaching the acquisition with that in mind.

Kison Patel: You got some layers. Could you elaborate on that a little bit? Cause you mentioned here's Corp dev sets. You have your integration lead team. And then obviously operationally leaders like yourself. And then when you say in the portfolio, what would that represent? 

Ashley Rice: What I mean by portfolio is when you look at, for Cisco, one of our large portfolios is around security or collaboration. So we're in there with those senior leaders in the organization talking about what is their next couple of years. 

And that's about as far as we can go out these days, trajectory looks like for their portfolio of business. What does that mean within their organization for their cross-functional partners, in delivering on these strategies?

And then what other impacts might have. It's much less just about the acquisition itself and about the acquisitions and the ripple effects they have within the broader offering portfolios then how we play, there's a bunch of teams in that of course. 

To the point of who's playing in that Corp dev has that partnership with the business. So when we talk about working with those senior leaders, it is Corp dev in the conversation. 

It is the acquisition integration community in that conversation. And then from a functional perspective, it's each of the functions as well. 

Kimberly Baird: We have a lot of dedicated M&A professionals across all of our functions.

So we have the centralized groups, which are like Corp dev integration. But then in each of our functions, we have dedicated groups of individuals that work only on acquisitions. 

And that's why we're able to focus so much on acquisitions. It's a core part of our innovation strategy beyond organic.

How have you scaled agile to work with multiple companies and deal sizes and your internal infrastructure? 

Kimberly Baird: To dovetail off that last comment, I mean, that's important that you have consistent people that are approaching every acquisition. Those people are learning every time they do it. So we're able to garner from our experience and bring that to the business. 

Our business groups are focused on technology areas and then there are support functions as well for those businesses. So that's kind of how we're organized. We really walk the line between the business and the rest of the functions that support them.

It's really needed because anybody that's tried to implement integrations into a company, whether it's small or large, you know that you're changing the process. 

Whatever the run the business is, whatever normal interactions happen with the supply chain, or normal interactions that happen with the sales team. 

Those get interrupted and changed when you're integrating that company. So managing that sort of out-of-cycle process is what we specialize in. That's where we really create value in that kind of activity. 

And that's also the reason why we're able to scale the way we do because we have that consistency practice. 

Ashley Rice: What we've described in our evolution of less granular level to do's and more of that top-line thinking about what are the key to do's along the way. Especially those that have dependencies across multiple areas or functions is we can very quickly assess for a certain deal. 

For example, if there's no talent coming over, right? Obviously, that kills in effect a piece of the work for that particular deal. 

So I do think we've organized in a way that allows us to quickly assess what would be needed for a deal and then scale or right-size to the work for the integration. We could still get better at it. I'm pretty sure. 

What were the challenges when you're trying to scale an agile approach across a large organization is yours? 

Ashley Rice: There are many areas of HR, for example, like immigration, but if it's a three-person deal or if it's a 3000 person deal, you've still got to check the box around integrations.

It's hard to figure out what are the things that you must do regardless of size. And what are the things that you strategically either skip or cut a corner because it doesn't add strategic value for that particular deal. 

It's getting to be in an agile way quickly, what's the right balance between the must-haves and the little bit of art.

Kimberly Baird: We've been working on driving a lot more accountability. You had mentioned about the immigration item like it's almost always a part of the scenario. We look at the project planning the same way. 

• What are the value drivers? 
• How do you specifically in IT, or acquisition integration for operations 
• how do you fit in? How can you help meet the goal and what activities are going to help you get there? 

Instead of having a plan with thousands of items in it, we have very small plans basically killed like tons and tons of tasks out of our process and put the onus on the person that's responsible for their say their function in an acquisition integration rule to tell us what are the top five things you have to do in order to achieve this goal?

For the synergy, for the revenue growth, whatever it is for the deal thesis. And they come to the table with those things. Now there's going to be a ton of compliance items and others want to have, but they're not must-haves. 

And so we're going through a process of trying to make sure that we're not overburdening the target company coming in with things that aren't necessarily material. 

So that the threshold of materiality is relative to the goal at stake. And that's how we kind of keep that focus, that North star, as we talked about earlier, and then we devise our plans accordingly. 

So immigration is a really important point because you've got a hundred people that are in the midst of their green card process or whatever it is.You really have to put a big plan around focusing on that. Like there's no question you don't want a huge part of the employee base to not be able to come over. 

It's super important because you're impacting people's lives, but other things are maybe not as easy to decide on, like:Do you force them to move into an application that they don't like? there's a lot of decisions within the operation.

And I think having those priorities against the value drivers. And then also always sort of reflecting that against the cultural assessment. Are you going to destroy value somehow by the things that you do? 

We always have to be really cognizant of that because we have a big company and there's a big machine of things that, Oh, well you have to do it this way, but we do have to do it that way. My role is to figure out what really matters and what doesn't.

Kison Patel: It's interesting how you really emphasize the goals, making sure they're prioritized and really clear and having that level of flexibility so that you can build things out as you go. 

Can you contrast this between the traditional way, because large organizations typically mean large playbooks? How does that change? What does that look like? 

Ashley Rice: People went out really quick that comes up quite frequently. We are a functionally aligned organization at Cisco, and we've been quite successful that way with sales, with the services arm and an engineering arm, as three of those main go-to-market and development functions. 

Acquisitions, especially startups are not designed that way. So that engine doesn't fit the reality of how work gets done. And in fact, we might get in the way of achieving something in that strategy by disabling their ability to get work done. So we're often in a conversation about how do we stage that? 

Maybe the end game is still functional alignment? But how do we create the space for us to really learn about how these guys do business? 

Potentially change some things about the way we do business and then ultimately land in that end, functionally aligned picture If we need to. 

That's a hugely common one cause go to market and sales functions and motions are always very close to heart for many people. 

Any other examples? 

Kimberly Baird: Oftentimes I've seen the engineering transitions delayed because our primary goal is some sort of accelerant. We want to get some feature in the marketplace, whatever it is, when the teams come in, they need to be able to focus on that work. 

It's usually later than everybody wants. So everything's always like: Oh, hurry up we're behind because the process of a transaction takes the time it takes. Sometimes you can't predict how long that's going to take. 

So if you as a business leader, rely on some technology coming in you want obviously to prioritize that right away. So oftentimes from an integration, like an operations standpoint, we align with the business leader, the sponsor, within Cisco. 

And with the leader of the company coming in and making essentially like an agreement that say: 

‘We normally would want you on these systems and to make this migration happen on your requirements system or whatever right away but we're going to wait. 

Because you have this really important goal to achieve that we've agreed is the highest priority.  So we're going to stagger that approach and take it up when your team has more time and has ramped up. 

There's a lot of decisions like that, that need to be made.

Can you walk me through, how do you drive change in a large organization?

Ashley Rice: You hear me talk a lot from the people perspective? That is what's in my DNA to talk about, but we throw out different terms. Like what is the experience we create in trying to get from point A to point B that is in effect, change management.

It's a similar thing to culture. You see, business people raise their hands and not want to talk about culture, but inherently they know that it can impact. 

One thing that I highly recommend. And it's very tied to how we've done culture too, is how do we get business leaders coming along with us on both sides, the target side and what they care about and the incumbent side and what they care about in their terms.

• The M&A community has to do their homework around.
• How do they talk about what it is they're trying to deliver?
• How do they talk about the things that enable them to get there? 
• When they talk about talent? From my perspective, what are the things that fire up this type of talent to get there? 

Whereas a company the size of Cisco might not to brag, but right, we're the number one employer in the world three years in a row. That's a great accolade to have, but if you're somebody who's a programmer in your early twenties and you're fired up by the most innovative code in the AIML space, that's not necessarily going to ring their bell.

So, when you're pulling somebody through that change curve, it's really getting good at assessing what are their care-abouts going to be. And then how do you help and enable the business leaders to drive that change with the right language around it. It's been a journey for sure. 

Kison Patel: It's interesting how you sort of look at what the expectation is and build around it with how do you sort of cater that in terms of building out, what's going to bring music to the person's ears to drive that change.

I look at it as something similar where it's like, how do you figure out the aches and pains, and then emphasize that and turn that into the driving reason to encourage the change? I'm curious from your view, where do you see it? Personally, this is the thing where a lot of this stuff sounds great in play.

We're already seeing initiatives from other organizations. And I feel like it's the tech companies that are the ones that are early at doing this. And there's a lot of traditional companies that we all know staple names of that aren't and they're kind of where do we sit in this, where's that curve going to be?

Cause I feel like eventually, this is the shift towards the best practice of M&A. 

How do you invoke that change, especially large companies? 

Kimberly Baird: We talked a little bit about this in our conversation a little while ago. In my career, I've always looked at where I can drive the most change to benefit the business. It's like my North star, which is why I really love being in M&A, the last five years have been awesome. 

But before that, I was always looking for how do I help to drive change in the company. Cisco's a really big company, as much as we like to talk about how much we change. It's not always easy and it's never easy and it doesn't always happen when it needs to happen. 

Many people in the audience might be in the same boat. I think most companies are in the same boat right now, whereas as a result of the pandemic, there are so many changes that are being thrust upon them. 

I also empathize with the fact that you might hear like this great best practice or idea for M&A based on something that we say or do or whatever. How do you sell that within your organization to actually get something to happen differently?

And oftentimes the thing you're experiencing is actually just a symptom of it, a bigger problem right? My advice is to look at where the board, where the leadership is saying, this is our significant pain where we're looking to make a change. 

Maybe it's not highlighted with pain. Maybe it's a growth goal. Maybe it's an adjacency or something your company is trying to do and engage that way. Align to those broader objectives. 

Because I was thinking about, as Ashley was talking, the best way to manage is change, although then bottoms up and top-down change management is much easier to do the top-down change management by the way. And that's what we do with the CEOs coming in. 

We talk to them about how they help lead their team through change. And that's where my role and Ashley's role working together is so important because with just a couple of conversations, you're going to accelerate the movement much faster or enhance the understanding of the target company.

One is like, how can you invoke change in a broader organization, which would be aligned to those bigger objectives and make your case for change there.

And then on the actual acquisition side, making your integration smooth I think is fundamentally dependent on your ability to have those conversations with the leaders. 

Both from a business sponsor standpoint if you have that kind of a situation or at the very least with the target leadership to help them to lead their team through the change. 

Moving to Agile, I feel a lot of it is just culture at the end of the day, it's almost just having this very change-oriented culture. Do you feel it's a shift in changing the culture to actually achieve this type of work?

Kimberly Baird: I certainly identify with Cisco, but we have sort of a risk-averse culture. We've been working on that for a lot of years, changing our culture at the corporate level and really taking more risks and being okay with that. 

You have this sort of balance of a big global company that has regulatory and compliance concerns, all these things that we need to adhere to but we also have this need to be super innovative from a technology standpoint and all of our systems and processes need to support that we have a healthy tension there. 

Cultural change is really the basis for the ability to move to agile because people just aren't comfortable with it at first if they haven't been working that way before.

Ashley Rice: I would almost even bring it back to basic human need. And that is change management encompasses many things. 

But fundamentally for acquisition to work, you have two sets of leaders who are really setting the tone for what is to be delivered and how that will be delivered and how people get energized and excited by that.

If they don't understand fundamentally how that will work, so things like governance are super important to get clear upfront, and where I think we've seen deals struggled the most is when there's a lack of just a conversation about when it's a type of decision about a product or go to market or finance, how are those decisions going to get made?

Those are our number one stumbling blocks. And that's where I think Kimberly and I spend a lot of our time facilitating good conversations with leaders. The other thing I would add to the risk averse is when you have a well-established engine of doing this work.

I think we have to consistently remind our teams that while we may know things, the acquired might not. It's not intentional to not have those conversations. 

I think when you have folks who've been doing this awhile, we forget what the newness of it might feel like. And the needs of individuals coming into an organization or in acquiring an organization who has not absorbed an acquired company before what that feels like.

So it is a really fundamental human need. And then that becomes a really easy conversation that ends up in a change plan at some point. 

Are there any hacks around this, any tools, software there, anything that helps this come along faster, easier?

Ashley Rice: I have an opinion on that, one is I think the value is in the conversation. So it's getting the right players, the right table in an iterative and consistent and pervasive way, and that is heavy lifting and there's no way around it. 

I do think from the tooling side, things like Dealroom, making sure you have pieces built into your process around sharing best practices, around knowledge basis, where you can be consistent and quick in sharing that information.

I think those are important, but I don't think you get around the iterative and pervasive process with a group of human beings, with the power to make some decisions. 

Kimberly Baird: Everybody has tools. The best tools I think are accessible, transparent, have digitized processes, process flows within them that are somewhat flexible. Those kinds of things can really help a team move forward. 

One of the things that I've been focusing more as an integration lead, is really thinking about the future state. Because if you're lucky enough to have a position like mine, where you're working with the corp dev, with the HR person early on. 

Your learnings and your observations and the information that you gather will be leveraged, it can easily be leveraged down the line for the integration. Obviously easier if you have a tool to capture all of that. 

But if you don't, it's just important to think about when you're developing a diligence approach. And do you have documentation of that? Think about, who's going to need this down the line, make sure that you keep it handy. 

And then you refer people to that later, so they can successfully transfer the information. I think one of the things with the larger company that we suffer from, sometimes it's someone that comes in new and doesn't get properly wrapped up and then has a conversation with the target that's already been had. 

I think that transfer of information, focus, and just always being thoughtful about who's going to need this down the line, something everybody can do.

Kison Patel: The people, the conversations to build a practice ultimately is the work that the people have to do. But then the tool can help the knowledge sharing aspect of it too, just to make sure others are on the same page. 

Any other practical advice you'd give to your fellow M&A practitioners watching this right now, and they're looking to step their game up in their organization?

Ashley Rice: What I'm learning in this space and Kimberly and I, I think we come at it with very similar outcomes and a different approach may be to how we get there, not divergently different, but if you've arrived in M&A. 

What I feel like is how do you get to and design for your organization again, culturally, what works for your organization, the right balance of repeatable process, so that you have credibility with your business in successful acquisition and integration with the right amount of flexibility for smart decision-making. 

And maybe some of that is supported by tools. I think we're still on that learning curve, but you have to have that flexibility in your process, in practice to be able to design for the business need and the shifting strategies, 

Kimberly Baird: I love the deals like I love the pace, I love all the complexity, all the back and forth, all the potential de-railers that you're always trying to make, I love that. 

I think that, oh, it's a focus on self-improvement and then always a focus on how you can improve the value you're delivering or that your team is delivering. 

I think it's the most important just having that. You and I have talked about this before, like just having that empathy and understanding across the board. 

Whether it's for the target, the change they're going through or the business leader and the accountability they have, to the commitments they've made to the board, and things like that. Everyone has different pressure points. 

Having an understanding of that is going to help you navigate to the successful outcome that everyone's looking for. The good thing is everyone has the same objective. If you've done this right then everyone has the same North star and then it makes it a little easier to navigate.

What's the craziest thing you've seen in M&A? 

Ashley Rice: 2020 in general was pretty crazy for M&A, although I think there's much that we learned and much that will stick, but I will say just to bring it home a little bit. I worked the deal in the past year one where we never met any of the people face to face.And that was just really weird and strange for me.

Another deal that went through everything from massive fires to COVID, to social activism, all in the deal cycle that we were in with them at some very critical points in time. So I would say for me, that was a very personally challenging, different crazy time. 

Kimberly Baird: Are we all just numbed to all this stuff happening now? There are like all these disasters and all these things that happened during 2020 and that affected all of us.  I did the same thing. I mean, we were, we had deals all through that full time, but we're still in. 

Kimberly Baird: We had things in flight, things starting up, a lot of prospects. There's just been a lot of deal volume. I think one thing that has been very clear to me now. It's like, how in some areas, in some industries, things have gone grinding to a halt in other industries, things have accelerated in tech that has happened. It's been an accelerant. 

Kison Patel: I know, now you have to really try hard to come up with something crazy in this market. So the whole interview will just be about the crazy stuff. Thank you both can Kimberly, Ashley. I really appreciate the time today and here's to the deal.

OUTRO

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M&A science is sponsored by Dealroom, a project management solution for mergers and acquisitions. Additional educational content is available on deal room’s blog at dealroom.net/blog. Thank you again for listening to M&A Science. See you next time.

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.