From Accounting to an M&A Career

Background

I started my career 15 years ago at PricewaterhouseCoopers in accounting. That's where I got my CPA certification. I was purely focused on accounting for the first nine years of my career. 

So after PWC, I joined ABM industries and the accounting group, where I led technical accounting, back in 2015. I had the opportunity to take a role in corporate FP&A at ABM, which was my first experience outside of accounting.  

And then, recently, a couple of years ago, I had the opportunity to start my career in M&A also at ABM industries. 

The Transition

I was involved with purchase accounting after the deal was done many times, but never really ran a deal. And it was a time in my career when I was ready for a change. It just so happens that our M&A function was being stood up, and we didn't really have one at ABM. So once I knew about the opportunity, it sounded exciting to me, I raised my hand and asked to be considered for the role. I was fortunate enough for the executive team to give me that opportunity. 

I've been here for ten years, and I have a history with the company in different roles. I knew many people and operations, and I have built some of those relationships and my role in FP&A, and I had taken a new role within their organization before. 

So making the switch from accounting to FP&A, which are more closely related, I was able to do that. In the beginning, I was on a one-person team, and I was doing a lot of research before I came across your podcast, which I found very helpful. 

I was beginning to stand up the function, and before I even dove into the details of which targets were best for us, I took a step back and looked at the company internally.

• What is our capacity? 
• What are we trying to accomplish through M&A?
• What types of business would make an impact on our bottom line?
• What are the more attractive ones from a financial standpoint that will give us the most return in the long run?

FP&A skills that are useful in M&A 

I have a good understanding of numbers, and that's always helpful. Also, because accounting is so black and white, if something doesn't make sense, you can dive in. Taking that from my previous experience, I applied that to anything M&A-related.

So now I am positioned where I know that I'm not the smartest person in the room or I don't have the most knowledge here. The team and everybody else have expertise here. It was more about becoming curious about certain aspects of the different functions and what they were raising.

And then, if something didn't make sense or if it didn't smell right, it could be a learning experience for me or something that needed to be looked at more deeply, and it snowballed into looking at something more closely and ultimately making the diligence process a lot more effective. 

Back in my FP&A role, that's where I created many relationships and also understood a little more about the types of headaches that each function has. So, that gave me an appreciation for what goes on in other functions, but M&A is a very different perspective because it comes down to evaluating if the whole company is worth buying. 

It takes more than just the financial numbers. It's looking from the legal standpoint, HR, and operations. So it got enhanced a lot in the M&A role for sure. 

Hardest Part

It was very uncomfortable. I found out early on that I was on the phone with people who have been in the industry for years and years. Sometimes I didn't even know the terminology that was pretty standard.

And the M&A world that started from zero, even speaking the same language, was almost like learning a new language in an aspect. 

That was hard but what I learned early on was that look, I have a lot to learn and made it very clear to people that I'm new to this, and I asked and used that curious mindset to say. Surprisingly people are very helpful in this industry, and they would take the time to explain. I was getting comfortable with the fact that there's a lot here that I don't know, and I need to ask for help. It was a huge learning curve for sure.

Where did you start learning? 

All sorts of places. The M&A Science podcast was a great resource for me to get started for sure. A lot of online reading materials, and I did a lot of research. I had the opportunity to work on a separate project with some of our consultants from McKinsey, who also offered their help in terms of getting me started, and they shared some great materials.

But also with the different functions, again, as we were going through the diligence process, just understanding what's important to HR, what's important to legal, to operations. And why is it important? How do you sift through the noise?

Because initially, we would have a request list of 500 items that we would want to ask the potential targets and knowing to push back and say, is this really important? Or how is this going to change our minds about this potential target? 

So engaging in those back and forth discussions, even knowing that it's not my area of expertise, having those healthy discussions helped educate me and get us to a better place.

Alignment with M&A People

It goes back to being transparent about where we are and what our goal is here for the organization. What are we trying to accomplish? 

If you're asking about internally, the benefit that I had internally is that we were all rusty. We had done M&A before but not in a few years; some newer people had come to our organization. 

Although people have been involved in M&A before, it was understood that we were all starting from the ground up; where I came in was to make sure that we were aligned with the enterprise priorities, building a framework, and saying, here's what we're marching towards. The types of companies we're going to focus on. 

And I think that helped us all internally get aligned. And then in terms of when it came to the functional leaders, really being there to be a resource for them and letting them understand that they're on the driver's seat because they're the ones who really understand their function the best. 

Implementing Changes

Early on, a lot of people wanted to buy competitors, and they all had this decentralized mindset of what we wanted to do in our M&A function.

So I told them to slow down and that we need to align with the executive team on our enterprise priorities. There are limited funds, and we should be prioritizing companies that fit our strategy.

As a result, we've created a framework that gave us clarity as to what good looks like from a target standpoint. Now we're proactively building a pipeline and going to each business unit to build a pipeline that we can then broadly reach out to those potential targets. 

It's a much more disciplined approach. But I think it's the right approach for us. And we're already starting to see how things are coming together. It's a lot more centralized, and we're learning because we have the same teams, at least at the cross-functional level involved in M&A. We're learning with each acquisition.

So we're getting better and better, and we're creating our playbooks and creating a process around them. Now the integration is underway and things have settled down a little bit while we're remaining opportunistic with what comes on the market. We're very much being proactive, and we're doing an outreach to those attractive targets. 

Sourcing Framework

The way that we categorize or score targets is through three different lenses. 

1. Strategic fit
2. Operating model - Is it attractive to us how they do business? 
3. Financial profile and our ability to grow and what it does ultimately to our value as a company. 

We recognize that M&A is going to be a big pillar for us. We had to create some guidelines in terms of what would be a good strategic fit for us? And what types of companies do we want to pursue? 

And then, we partner up with the business leaders and get alignment around the strategy and what makes sense at the enterprise level. We need to understand what makes sense for their business because we don't want to use a one-size-fits-all strategy.

Then we score potential targets across 15 different line items where we give them a score of one to five on what makes them attractive. And that kind of gives us a blended score and helps us prioritize who we want to reach out to. 

Communicating the Strategy

Depending on who your audience is, that communication will obviously change. But what I like about the framework is that it doesn't change. We look at every acquisition as the same as those three lenses. So it's well understood both at the executive team level and the operations team level when we're working with them.

When we're working with the operations team, we have regular meetings, and we meet at least once a week if not more. And then we define what a good score looks like, or what gets a five in each category versus a one through workshops. 

And then, we have a write-up for each of the top targets our operations lead. We'll meet with our executive team and explain why those are good targets to pursue on how they make sense for their business. So there are multiple layers of communication. 

Preventing Deal Fever

It's very real and it's hard not to have that, especially when so much has gone into evaluating a company and there might be certain aspects of it that they really love. I think we have a couple of things here that help us with that. 

First is the framework. It's an excellent way to remember what we aligned on. Go back to the scoring framework and prove why it doesn't make sense. That's one way to do it. 

The other thing is we're incredibly fortunate that we take M&A very seriously, and our executive leadership team, including the CEO, is very much in the know about what's happening in M&A.. We have a very collaborative culture here. 

Even with the executive team, we have frequent meetings. If someone has that deal fever, they will discuss in a room full of decision-makers who can counter that if needed and come to the right conclusion. 

Implementing Change

I came across difficulties in implementing change in my other career but not this one. The harder part was slowing people down because they were eager to go and buy companies. And sometimes, there was a level of frustration about why it took so long. 

And I think what helped there was just, you said earlier, transparency and consistent communication of here is where we are, here's what we're trying to accomplish, and here's what we need from you or we don't know yet what we need from you. 

Integration planning

I'm involved end-to-end, and we start integration planning very early. So while we're still in diligence and when things are starting to come together, it looks like this deal will definitely happen. We encourage cross-functional teams and business leaders to think about integration.

And we are building playbooks. We have each functional leader who will own their part or how they will integrate. And obviously, they'll go through the IMO, but the leaders are empowered to ultimately develop our plan. 

We still hold our integration management office meetings once a week where things have settled down, but we report what's happening so that everybody's aware of how their areas might be impacted. 

Now, as it relates to future deals, I'm working with the leaders on how we start planning for smaller size tuck-in deals. And how does that integration look different, and how can we start thinking about it now? Because I know we know it's coming at some point in the future.

So we're thinking about integration even before the deal because we recognize there's a difference depending on the asset's profile. 

Maintaining accountability 

There are three main areas that we are tracking from an integration standpoint.

1. Synergies - we want to make sure that we have a specific plan for that. How the synergies will be realized, the timeline, and what function is committed to what amount is tracked by person. 

1. Impact on our team members - You have to ensure that key employees feel included. Obviously, with any acquisition, there will be a lot of uncertainty at the beginning, and people's world is changing, but it's all about transparency.

1. Impact on our clients - We have to keep apples on how our clients feel about the change of acquiring a company. Having built-in relationships with those clients from day one and constantly staying in front of them and making sure that we're managing those relationships and sharing with them what the value that they're getting from this acquisition or being part of ABM. 

We meet with the owners of each of those three dashboards weekly. The operations dashboard or the client dashboard is owned by our operations lead. And then, the people dashboard is the operations person working very closely with HR.

So the three of them come together because, ultimately, that also can impact synergies, and every other week, we report to our executive team where we stand and if there's anything that has changed, that they should be aware of. And then we also report regularly to the board, obviously at a much higher level in terms of how things are progressing.

Accountability is key and people know that they're being held accountable for their piece of what they own. 

Synergy dashboard

The synergy dashboard is purely financially driven, and anything that is integration-related doesn't necessarily have a dollar. And by the way, even the activities that could have a dollar impact are tracked really as part of our integration management office when we do our weekly reporting to make sure that people are still on track with their activities or need any help. 

For the people part of the dashboard, the majority of the synergies from each function is listed out on the dashboard and they have a target number that they need to hit for a run rate, synergy number, and then a date by one. 

They need to hit it every couple of weeks or every month, we will report where we are compared to what was planned. And if there are any changes that could make that different route, and we do a different outcome. 

Customer Dashboard

We have the detail of every single customer that was acquired. And a lot of review goes at a granular level. 

What ends up making it to the dashboard is categorized, and we'll get what cross-selling opportunities we have had so far and how much we have expanded because of the different relationships. And also, what are some potential clients that might be at risk and what are we doing about them? 

People Dashboard

Attrition is a big thing, and we've really split the people dashboard into functional and operational. 

Starting with the acquired organization and tracking from day one, I started out with X number of people in operations and functions. And we are here now then we split out how much of those exits were planned versus what was unplanned.

The last thing you want is somebody in a key position leaving and taking those clients' relationships. That's where a lot of it goes in, I think to make sure we stay close to that.

One of the things that we track is also high potential employees that we have noticed for working with them. So a big part of when we acquire companies is that we want to make sure that we take the best of both cultures. Hopefully, it's a cultural fit, but also, we want to help people feel included, and we have from companies that we've acquired. 

Advice for Practitioners

Curiosity, courage, clarity, communication, and collaboration.

Courage is what got me here in the first place, and curiosity keeps me learning once I'm already in my new role—getting hands-on every two possible and collaborating with many people to learn.

Clarity, getting everyone to be on the same page on what is the vision? What are we trying to accomplish and get everyone to see the mandate and provide clarity around that is huge. 

Communication. I cannot stress this enough, especially being in this role. There are so many stakeholders. So you're dealing with all the leaders at the cross-functional teams, dealing with executive members, board, dealing with all the operations leads. 

We have many pockets of the business, and they each have their own need, and there's so much happening and so much changing all the time that communication is missed even with one person, it might seem minor, but it could lead to a lot of headaches down the road. So being organized and communicating as frequently as possible will pay off. 

Collaboration, honestly, M&A is a team sport, and it's not a one-person thing. So the more people are engaged, the more opinions and expertise you bring to the table. And I think the better the outcome, but I never make decisions on my own in this role; it's definitely a team decision. 

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