episode 

How to Build an M&A Team That Can Support Multi-Vertical Strategies

Ailene Holderness

Managing a multi-vertical M&A strategy requires a high-performing team, full of perpetual learners and with a strong appetite for risk-taking. In this episode, Ailene Holderness, Head of M&A at IAC, talks about how they manage their multi-vertical strategy and how to build a high-performing M&A team.

Jeff Desroches
VP of Corporate Development at Atlas Copco
Ivan Golubic
Former VP Corporate Development at Goodyear
Erik Levy
Group Head Corp Dev and M&A at DMGT PLC
Kison Patel
CEO at DealRoom

How to Build an M&A Team That Can Support Multi-Vertical Strategies

2 Aug
with 
Ailene Holderness
Or Listen On:

How to Build an M&A Team That Can Support Multi-Vertical Strategies

How to Build an M&A Team That Can Support Multi-Vertical Strategies

How do you manage a multi-vertical M&A strategy? IAC (NASDAQ: IAC) is one of the world’s leaders when it comes to building consumer internet companies. They are a proactive acquirer who always looks for future opportunities in a new vertical space.

For this episode of the M&A Science podcast, Kison had the pleasure of interviewing IAC's Head of M&A Ailene Holderness, about their strategy and how they build a team to execute it. Here are some of the highlights;

“Risk-taking should be rewarded. Institutions who embrace that can find people who adds a lot of value to their teams because they have done something outside of the box.” - Ailene Holderness

Multi Vertical Strategy

Most of the industries they look at are those providing products and services that consumers have been using for decades. They look for inefficiencies. These are companies that are on the cusp of transitioning from offline to online. They like to use their abilities to speed up this transition.  

Building a Team  

As the head of M&A, Ailene’s core responsibility is to lead smart, ambitious, growth-minded team members. In a fast-paced industry, one of the qualities that she is looking for is the ability to take risks. She likes people who are aggressive and hungry to identify the next big thing. She also believes that you should not hire people based on their current experience or capabilities. You should hire people because of their future potential.

Where to Find Talent

Finding good talent isn’t hard for IAC. They use LinkedIn heavily and people usually apply for the jobs that they post. But what makes them interesting is their referral program. They incentivize employees by referring people for roles. This motivates people to find talent that would fit in their company. As a result, she has many team members that have been referrals of other people within the organization.

special guests

Ailene Holderness
Head of M&A at IAC (NASDAQ: IAC)

special guests

Ailene Holderness
Head of M&A at IAC (NASDAQ: IAC)

Hosted by

Kison Patel
episode 

Episode Transcript

Intro

I'm your host Kison Patel, CEO, and Founder of M&A Science and Dealroom. Joining me today is Ailene Holderness, Head of M&A at IAC. Today, we're going to talk about hiring an M&A team and supporting multi-vertical strategies.

Can we kick off with just a brief background on your M&A experience? 

I joined IAC just over a year ago and my background is in private equity and investment banking. I've been investing in consumer companies primarily for just under a decade before joining IAC.

And I was really attracted to IAC for its track record in building industry, leading consumer internet companies. I see such a unique animal. 

Candidly, I didn't know much about it before. This job opportunity found its way to me, but I'm so happy that I did. 

It's a publicly traded holding company that has built many brands and companies that you and I would know as consumers, Dash.com, Angie's list, Vimeo, Expedia, just to name a few.

And the M&A team is integral to IAC's growth. We help to source diligence and execute acquisitions for the businesses we operate and identify opportunities in new verticals. 

Consumer companies and consumers internet is a broad investment mandate. 

So we are always thinking forward in industries where we see offline to online transition where we see an efficiency that we can disrupt and where we can build a really big business.

One of the big items you are tasked with at IAC was building on the M&A team. Can you walk me through your approach? 

One of my goals was to build a strong high functioning team. It's a very exciting time in IAC's history. We're in build-mode, we're sitting on 3 billion of cash, we're about to spin-off them and looking for companies that we’ll fuel the next leg of growth. 

So looking for that hungry self-starter, someone who has demonstrated some level of risk-taking in their careers and has the growth mindset. 

As we look to build the team's talent and people who would really take the opportunity at hand and run with it, be able to work independently, but also collaborate with the rest of the team. That's what I was looking for.

I had a lot of help and our recruiting team is led by an IAC industry leader that has been here for 20 plus years. She helps me look for and really articulate why IAC is different and what types of people and what skill sets really fit within our ecosystem. 

So my approach was to work collaboratively with her, of course, taking the feedback of people who have sat in this role before, but really go out there and see who was attracted to the current mandate and find the best people we could.

When it comes to getting the culture match, what are some of the unique things that really stick out when you're looking at candidates? 

I always start with one of the important things, actually our CFO, Glenn Schiffman, when he hired me and within the first couple of months I started in IAC, he said you really don't hire someone solely based on their experience and capabilities today.

They're looking for future potential. That's what you're hiring. How can you stack out a person's ability and desire to grow, learn, and evolve beyond what they've been doing for the last 10 years, 5 to 10 years, depending on the level of maturity we hired into our team. 

There were requisite skills that you needed educational and requisite experience, but we did look beyond someone who ended up being a great hire.

He didn't have consumer tech experience in his resume, but you could tell there was that genuine interest and passion for what we were trying to accomplish, what the history and legacy of IAC was. 

Sometimes people overlook and focus too much on resumes and what can be demonstrated in words. 

But when you speak to someone and look across the table and ask them to tell you about a company they find interesting and why; you can tell if they have a vested interest or they're just speaking academically. 

So I always ask, would you put your own money and bet on this company? Would you quit your job to be part of this company? And that's the type of conviction I like to see in a pitch. 

You can sense a genuine interest in a video call from someone if that's coming from a place of passion. 

When you go through the process of assembling a team, what's your approach to get the right combination of skill sets to come together?

The word diversity, it’s used a lot. And building a diverse team doesn't really just mean hiring people with different backgrounds of race, ethnicity, socioeconomic. Diversity of thought, and experience is something I think about often.

So that comes across based on someone's personal experiences, as well as their work experiences. And it's so important to what we do here at IAC, groupthink is a pretty scary thing when you're investing in tech companies and the pace of innovation is so fast. 

So we try to avoid getting into these overconfidence cycles where we think we know based on something that happened five years ago or something that just worked for us.

Bringing people together with diverse experiences is something that was a priority for me. It’s overlooked sometimes that someone's personal experience having grown up somewhere. 

Or maybe done in a sense that doesn't fit into the perfect cookie-cutter path gives them an edge or gives them a different way of looking at something. They can contribute around the table.

A lot of our investment committees end up being spirited debates where it's a free forum based on what you've read and what people can contribute freely around the table with our most senior executives. 

And you really see how people with different experiences consume products and services differently.

That's part of something I always set out for. Trying to hire people that won't have the exact same experience when looking at a consumer product. 

Or had a different experience with homeownership growing up or with an insurance product have different perceptions and beliefs because of their very place of growing up and what work experience they have.

So you're not laser-focused on just hiring Goldman bankers and Harvard MBAs? 

It's a tough one because coming from the world of investment banking, I do think great training comes from any of those institutions you mentioned. Rigorous and very technical skillsets are developed at places like Goldman.

I worked at CITI in my first year post graduating college and I wouldn't give up those experiences for anything. 

But I think that a perfect example is there are some folks on our team who come from very similar backgrounds, investment banking to private equity know that skillset. We don't need 10 people who have the exact same skill set and career path.

And we have purposely looked for people who have an edge or a difference of opinion as simple as, works at a public fund as opposed to a private fund, has experienced doing something entrepreneurial, has experienced working at a startup. 

These are things that really jump off a resume page for me because it shows a level of risk-taking. It shows a level of just breaking off from the norm. 

I think a lot of us do have actually had investment banking backgrounds for a couple of years, but we've had squiggly lines getting to the ultimate end goal of where we are today. I find that to be a huge value contributor to the debates we have at our investment committee.

What are the key things you're looking for when you're searching for people to join the team? 

A couple of things: one is growth-minded and growth-oriented in nature.

So people who are willing to accept that what they used to think they knew perfectly may no longer be true, so hard to articulate, but you can get these qualities by asking someone how they think about the future of the industry for example. 

Let's say someone has on their resume, they spent their entire career, someone like me looking at consumer retail. 

What that meant, when I was an analyst, was mostly offline businesses, multi-unit retailers, and marketing to ultimately drive consumers into their stores to purchase goods. 

Obviously, over the last 10 years, that has changed dramatically. I spoke to someone who is in the same spot as I was 10 years ago, consumer retail is a completely different paradigm now.

Online is a huge push, e-commerce, how you attract customers in new channels due to social media, the growth of social media, as well as search engines, there's been so much change in industries. 

There are some people who and this is dynamic by the way, people who can change the way they think about things, are so eager to learn about what's changing and question, rethink what they know.

And there are people who are really hesitant to rethink what they know because it makes them uncomfortable. It's a learned skill set, for sure. It makes people uncomfortable to learn new things. 

But I always look for that quality of being able to rethink or question yourself and enjoy that process of questioning. Because as an investor, that's what prevents you from going down an overconfidence cycle. 

Making a bad decision because you think you know the answer when you haven't thought through every variable that can change your perspective. 

Where do you find talent? 

This is so cliche, we do find it and we use LinkedIn a lot. You don't need to go down a traditional path to find people, generally, people who are interested in your company apply to roles that you put out.

And that was a learning experience for me. Certainly, I was wrong. The world I came from was always using external resources, having very curated lists of analysts. 

And you can only find good talent if you went to some set of recruiters and a very mind-curated group of prospects. 

But we've been very broad or at least I've seen from the outside in and working with our internal team, that you can find talent in places you wouldn't normally look, folks who are off the beaten path.

Those who are interested in potentially making a career pivot or have come out of business school and try their hand at something and now want to get back into investing. 

They should not be dings on people's resumes, right? I think risk-taking should be rewarded. 

And institutions who embrace that and companies who look beyond people who have just followed a very steep path and find people who can add a lot of value to their teams because they are risk-takers and have done something maybe outside of the box.

We have a great referral program. We have a large network that I see as ever-evolving, and we definitely incentivize our employees on referring people for roles that they think they'd be great at. 

And being monetarily rewarded if that person ultimately takes the job. So you'd be amazed at how many people on my team and others have been referrals of someone outside in a different division that I see or at a portfolio company. 

We've found great success in doing that. LinkedIn posts, as well as making sure we’re also looking at the very top of the funnel and building a pipeline for future IAC prospects. 

So we go to career fairs. We participate at schools where there's a top talent and we're of course, like every other firm fighting for that top talent and getting our name out there.

But for example, we have two summer interns that we're currently interviewing for the M&A team right now and we hope to develop and cultivate that talent, such that when a spot opens on the team for full-time, they'll come back.

What about hiring someone internally? 

Yes. We like to hire from within. We've done that over really the full history of IAC. If you find someone who is ambitious and driven and smart. And you throw them into a role and they either sink or swim. 

But you make a bet on someone with the hope that they can grow and evolve into the challenge that maybe outside of what they've been doing, but you think they have the growth potential to do a great job at that role. 

I can point to several examples where we've done that, where people have been given a shot to be a CFO of a company when they've never been a CFO, they've only had investing experience. 

Or take the top spot at a company, having never run a company, but have the building blocks of a lot of things that you need to run a company successfully. 

Judgment of people, leadership skills, organization, keen understanding of growth, and M&A, and all of the above but didn't have the role of CEO before that. 

And it's such a rare thing that really attracted me to the company that they stand by their word and have continued even as IAC has become so successful in spinning out 10 public companies, soon to be 11 within now. 

That they've stayed true to build future leaders within the company. And when the opportunity presents itself they have demonstrated over and over again that they'll give people a shot. 

That’s where a lot of these companies are, at least in my former life in private equity, where you'd hire someone who has a track record of 25 years of running a business. And we've done the opposite.

Young, ambitious people are at the helm of most IAC companies. And that's another reason we are able to attract great talent is people see that IAC does what it says in terms of giving people a shot and internal mobility. 

And that's why there are people who have stayed around the IAC network for so long because we continuously promote from within and let people wear both hats because we'd rather have someone who has been in and around IAC stay within the organization.

So it's also a great way to retain employees by giving them a new role to go and crush it. 

What advice would you give to that person that's in a role, but that's super motivated, high performing, high potential, and they want a shot at the CFO, the CEO getting on the M&A team following your footsteps. What advice would you give to them? How do you get that actual opportunity to give it a shot? 

Depends on where you're trying to go, but I'll use the example that I know, which is what a lot of folks on my team say, Iwant to be an operator, I want to end up going to one of these companies and be in a leadership role.

And the advice I give and my seniors give at the very top of our organization is to get to know those companies and the people who are leading those companies as best you can. 

Reach out, you have to be proactive in your own career. Asking permission to reach out really never did anyone good. 

If you have a genuine interest in a business and a role, the first thing and best thing you can do is to get to know the people who are in those roles today and try to deliver value to them. People are generally receptive to others who are trying to help them in their mission. 

A good example is within the M&A team, we think about, as I said, a funnel into our portfolio companies, and it's not the only funnel, it's not the only exit plan for being an M&A. But a lot of the folks that sit on my team have the aspirations of being operators.

We say, we'll get involved in those companies, find where your skill set is valuable. And by osmosis, you'll learn about their company, their strategy, and be able to grow beyond the skill set you currently have just by being around the table. 

What I've noticed in my own career is if you use your skill set, provide value to people in different divisions of what you're doing with a common goal, you will learn their skill set and they will benefit from yours. 

And that collaboration creates great things, and synergies however you want to describe it. You learn from them, they learn from you. And then the next time they think the role opens, a lot of people call this luck, but it's never luck. 

There's a couple of people, they'll remember that you added a ton of value in that project and, oh, they were, they had more of a skillset here, but I bet they could learn because they learned a lot just by working side by side with me. 

The wrong approach is to say, I really want to do this. So should I find a mentor to help me get there and then wait for the next step from what they think or wait for the spot to open? 

Because by the time the spot is open the people who are ready to step into that role have already proactively gone in front of the decision-makers to be very straightforward about it and show that they can add value and be great at that. 

If you wait for the spot to be open often, it's been filled by someone who's already laid the groundwork to win it. 

My overall message is proactiveness. Another piece of advice would be to really understand what you know and what you do well, and what you're excited about?

You really distill down why you want to make a shift in your career or move into a different division, or a different role, or position. 

Try to find the linkages between what you're doing now and what you want to be doing and why your current skill set can translate or add value to what you ultimately want to do.

And that's a very important gap in the bridge because wanting and doing are different things. I also think there are a lot of roles that people think they'd be great at. I've had this firsthand experience myself. 

But then when you start thinking about what those roles entail and what you enjoy doing in your current position, you realize actually it's not a great fit that it sounds good but the linkages are actually not there.

And what you enjoy doing has nothing to do with the job that you think is the right fit for you. 

If you speak to the people doing the role today, they will tell you what they spend all day and their weekends thinking about and you can assess if you would also want to be spending all of your time thinking about those things. 

If the answer is no, you've saved yourself some time with cover letters and references. 

How has COVID affected culture and what's the transition look like? 

I must say I started this role in a COVID world. When I joined the team just over a year ago, I started virtually. Most people can say it was very seamless. 

There's been lots of discussion of how much work and productivity can be done virtually? I was amazed at how seamless and how well the teamwork and collaboration unfolded virtually. 

That said, I think that we are now at a place where we can hopefully all see a line of sight and have a back-office environment where people feel comfortable coming to the office and meeting in person.

I've been back at the office for about a month. And I think that it's proven to me or shown me, I didn't forget during that one year that it's hard to replicate a lot of things in a remote setting. 

And so I'm a big believer that collaborating and the mentorship and apprenticeship that you get in-person do make a difference and I see value in having shared spaces. 

So it's impacted it, every business is going to have to contemplate what post-COVID in the office means. And everyone has to make that decision for themselves about their view on what post-COVID work looks like. 

From my own experience, I think you can get lots done virtually but it doesn't replace some in-person collaboration.

How's your M&A approach different from when you're working with portfolio companies versus looking at opportunities for new verticals? 

I'll start with the portfolio company. It's top of mind since we've just we're close to announcing a deal for one of my portfolio companies and have closed another deal since I started our portfolio company care.com.

When we look at portfolio companies, our goal is really to be strategic first. So we look at what the company is trying to achieve over the near term as well as the longer-term horizon. 

And then look for ways that M&A can either accelerate that plan or help them reach those goals. 

M&A is extremely close with our operating company management team. So the CFO and Corp Dev team were always guided by the operating team strategy first. 

You look at it through the lens. Does this acquisition get us to the goal faster, better, more efficiently?

And if those things hold true it really comes down to justifying valuation. Of course, M&A team drives and helps to determine whether that vehicle is true, that valuation is justified and we want to make the size of the bet. 

But it's really never without the full buy-in of the management team on faster, better, more efficient, that's the requisite. And then secondly, on portfolio companies, I guess this applies really on both sides. 

If it's a competitive process we do need to do the work of why we would win versus others. I think there's this notion of if you're strategic, you always have a lower cost of capital. And you should always be able to pay more.

And that's certainly not the truth in this current state of M&A we live in. So it's part of the M&A team's role to think through deal strategy and execution why we win the race. 

So you're essentially mapping these deals to the strategy which seems to be pretty mature and defined for these portfolio companies in terms of are they filling in white space or are they looking for market expansion?

I can give an example on that to kind of bring it to life, because it varies across the companies.Of course, some are much more defined. Their organic growth plan is very much tied to a product roadmap. 

We're trying to get deeper into on-demand services for example, with Care. And we're building a product to turn a subscription service into on-demand. 

And M&A is definitely looked at in that lens as can we acquire a business that accelerates that product roadmap or as already there, the buy versus build. 

Market expansion, you mentioned, is something we think about supply is something we think about in a marketplace at Angie home services we have a network of 250,000 service professionals. 

We're supply constraints. The consumer demand for these services outstrips the supply we have in the network. So do we think about how to accelerate supply with the acquisition? Absolutely. That can look different as of course, we're not acquiring stagnant supply.

We'd like to acquire a company that will meaningfully accelerate our ability to manufacture more supplies. 

A perfect example of this would be in a sector where it's current, let me give an example, Angie would be looking through our top 10 categories and we know we want to go deeper into the transactions. So one of our initiatives is pre-priced services. 

So rather than going through a consumer flow and then being matched with three service providers. 

One of our large product initiatives at Angie home service is to be the company for everything home is to have pre-priced services where the consumer can simply click on cleaning service or click on an appliance repair and we do the rest at Angie. 

We find the pro who fulfills the job. We deal with customer service and that's all negotiated upfront as a pre-priced service. This is a huge initiative for us at Angie. It lives with our other offering but is a huge lever of growth. 

M&A comes into play to think through. Are there categories where we can identify the company that's done this and owns the market for one of 200 categories that we service at Angie? 

We think about that in terms of scaling market expansion, but this would be very much category expansion for us. 

What's your approach to new verticals?

It's different certainly, on a new vertical it's much more top-down. We like to look at industries where we think the end state is obvious. 

So touched on this, but to go back to it, are there traditional industries where things are clearly broken, antiquated, inefficient? Are those big industries that we want to take a long-term deal on? 

Several of our businesses are consumer marketplaces. So we would say we have an ability to see industries that are on that cusp of an offline to online transition. 

And what can we do with our expertise in consumer marketing to accelerate that adoption of offline to online? And we look for businesses where scale improves the product as opposed to the price. 

Putting all of these things together top-down makes a lot of sense because number one, you need to find the industry that we're excited about, where all these things seem to make sense. 

Big enough TAM with clear inefficiencies that we can innovate and disrupt, where there are sustainable modes that we can create, whether that be network effects more and this is the point in time scale improving the product as opposed to just the price. 

So the more users that enter a marketplace, the more buyers, the more sellers, the better the ultimate product they come for the consumer. The better the product, they come for the supply. We like to see that those flywheels are working.

And at the heart of it, we're looking at consumer experiences and looking to improve with tech or with new thinking or potentially a new business model that we're excited about making a bet on something that we're forever owners and businesses, which is a unique piece of IAC.

So would we be excited about what the end state looks like in 20 years? If we execute X, Y, and Z, what does the business look like in 10 years? And does that get us excited? 

To give you a high level, I've spoken to operational expertise IAC has in building, scaling digital businesses but we take all of that and try to not lead with what we can do to a business ultimately because that's an optimization play.

We'd like to look at what are the secular trends that are happening in the industry? Who are the incumbent players? 

I sound very much like a VC investor right now, but that does guide our thinking at the very top before we get into what the opportunity looks like and how we would run our playbook?

Because I think if the previous things are not true, we’re using our limited time and resources to run at an industry where it just doesn't make sense for us to devote time and 

I was very vague when I said the end-state seems obvious or we're not fortune tellers but many of the industries that we look at are providing products and services that consumers and people have been using for centuries.

So what are the signals or inflection points in the market that you can see that the current state, the status quo doesn't make sense for where the world is today? I think we saw that in a dating with Match. 

I think we clearly saw that in Expedia in travel, that it didn't make sense to have an offline agent navigating that process for the consumer. It didn't make sense for people to be limited to dating people just within a small radius around them. 

We're seeing it right now and I think it's essential to our thesis, at Care.com, finding childcare and senior care and all types of care for the loved ones around you is a very high friction process that's difficult to navigate and that's emotional.

And technology and online can help navigate that experience and make it a more robust offering such that you as a consumer can find childcare. 

In a world where we spend most of our time on our phones and shop for products and services online.You’re seeing that virtually in every industry. 

We certainly think that the long-term secular trend will continue. But we also note that we're not the only one thing. 

So we look to the industries that haven't been overly cultivated, and we can come in from, with a fresh perspective, and run our playbook. 

I can point to a couple where the status quo processes have been entrenched in consumer thinking for so long that they're like the obvious ones that people have spent less time on. People always say to me that it was so obvious that it should have happened.

But of course, at the time when the industry was where it wasn't obvious to people because perceptions are sticky. Things have always been a certain way. 

It really takes someone to rethink and question the status quo. And of course, a lot of capital and strong leaders and great execution to build those businesses.

I can name 10 industries I think need disruption but are there the 10 leaders who are going to build great sustainable cash flow positive businesses successfully out of those inefficiencies? Unclear. 

Finding both and marrying the right team opportunity, belief in that execution that's when a bit of luck around the way that all of those things work.

We've certainly gotten lucky in the history of IAC with all of those things coming through under the right backdrop but of course, without making that you can't get lucky. 

So you need to develop a thesis, pick a horse and do your best to anticipate the possible pitfalls, think faster than your competitors. 

I don't think there's any low-hanging fruit in tech right now. There's a lot of capital running at all the markets that is ripe for opportunity right now in offline to online. 

So given not a lot of low-hanging fruit, it's incumbent on investors to really not only think about the opportunity and just set on TAM, but find the asset and the entry points that yield the best returns for their shareholders.

You have to get all the pieces working the right way to get that perfect storm for success. 

Absolutely. And you can't do any of those things without taking a certain level of risk. We say that a lot in our industry, but of course it's always qualified risk with outcomes that we like to say, you understand your baseline outcomes. 

But we want a path to have exponential growth or an unlock opportunity that everything can go. This will be a great investment in a big industry and a team we believe in. And if everything goes well and you get lucky, this could be a 10X. 

We like to find those unlock opportunities on the team that we believe in, not banking on that unlock happening. But certainly fueling that with our capital, our expertise.

And if everything goes right, you still have that chance to really see the full vision take place. That's really exciting to us.

There's a lot of opportunities to create value. 

Yes. Especially at a certain scale. I think we're trying to put 3 billion to work right now. We have to think about capital allocation. And what's the best return on our capital and return on our management time. 

We are set up to build companies. Certainly, that's what we've done over our 25-year history. Thinking ahead, run businesses, but you can't do that across a portfolio of 50 and we recognize that. 

And so return on capital and return on time are both important considerations for us.

One of the things that always intrigues me is the governance around doing deals. Can you walk me through what the decision-making process looks like? 

I’ll keep it at a high level. I'd describe it as collaborative and team-oriented throughout the entire process. 

We have a weekly meeting with our C-suite. We manage our deal process as anyone would with a funnel of opportunities at the very top and that gets whittled down over time. 

It's the best opportunities that give our exact most execs are most excitement at the end of the funnel. I think that our weekly is meant to cover everything within that funnel. 

So making sure that at the very top of the funnel we're looking at the right factors that there's interest in pursuing further as things progress then opportunities become more harvested, making sure reviewing in detail kind of due diligence.

And what are the key questions we need to understand that will get us super excited such that we would be interested in bidding on a company? 

And then all the way through execution making sure that at the very top of our organization we understand what we're buying, which ultimately is the most important but without having the previous steps, all of that context, you miss it. 

And the best process is things start at the very top where they’re still in ideation discovery mode. We look if you use my example earlier of a new vertical. 

You look across an industry that we think is really exciting. We identify all the companies that are chasing that opportunity. 

We make an assessment along with our management team on who we think is best positioned to win that industry.

Then of course is the actual deal-making process. Is there a build to be done at what price and does it make sense for us? Do we want to take that bet? And our CEO, CFO, CSO are all involved in that process along the way. 

And if it's a portfolio company acquisition, that management team. So it is very much collaborative. I know that's a high-level way of describing it, but it has to be collaborative. 

In that, you have several actors that play here and have an M&A team, you have a potential portfolio company and ultimately our exec needs to be able to stand in front of our shareholders and say, we support this acquisition.

This is the future of IAC growth and we're putting your capital at work in this new investment. 

Who's got the most influence between the CEO, board, yourself, and so forth? 

We have to think like owners. So every stakeholder who's in the decision-making room, down from someone in M&A myself portfolio company at the very top of our organization, we all have to think like owners and like you're writing a check from your own pocketbook. 

And that's the level of conviction that you need in order to stand in front of our CEO, CFO, CSO, and say, I recommend this deal.

That being said, it's very clear that my position is to surface opportunities and put them in front of people, do the work. 

Make sure that all along the way our team, our M&A team is working alongside the portfolio company to my whole point of, we would never do a deal without their a hundred percent buy-in.

Then it's managing that alongside the exec at IAC and making sure we're all cohesive and agreed upon what the thesis is and what we're willing to pay and decide the check we're willing to write for a deal. 

There's no clear cut. There's a decision-maker, this is the process. I'd rather just think about it as my team is responsible for sourcing diligence things and executing opportunities, and we bring people along the way and how are the decision-makers.

And then it's a collaborative decision on, we should do this, or we should not top-down, not bottom-up. It's truly collaborative. 

We're all equity holders and I see that a huge portion of our compensation is your stockholder.

It's something that is so important, is to have a stake in what you're doing. And we emphasize it a lot on our team. Would you write a check? 

It goes all the way to the top. If you have a conviction for an idea, and it's a good idea, would you write a check from your own bank account and why? And what size of that check of your personal wealth would you be willing to put on it?

I think people have a different risk appetite, but if you don't have that level of conviction, you can't stand in front of our board and say, I recommend this deal. If you wouldn't recommend it for yourself. 

How do you measure success on your deals?

We are a public company. So of course an important measure is the value we deliver to our shareholders.

I don't think about that on a day-to-day basis. I think that would be a very myopic way of looking at success is just our share price. I think we definitely take a longer-term view. 

We set long-term goals for our businesses, like any other investor but then we recognize that it's not necessarily a linear path to get there.

Short-term pain for long-term gain, I believe in that if the ultimate long-term view is the right one. We’re really open and honest with the street about our plans to do this when we're in build and invest mode for our companies. 

So Angie is a good example of this. We're undergoing a business transformation right now with the change from a lead connecting marketplace model to a true consumer fixed price product that we're delivering.

When you're in build mode you need to invest and sometimes you're sacrificing short-term profitability and that's okay to distill it down more simply. 

We're not a private equity firm so we don't look at a five-year exit. We're forever holders. That's the lens that we look at things. So 10 years out, is it sustainable as we're growing business withdrawn margin profiles that make us think it'll be around for the next 10 years.

That's probably success when we're thinking about it on a deal-by-deal basis. 

Is there a challenge with being a public company having these strategies that are built around a long view, but then as a public company, you're essentially measured on a quarterly basis? 

There's a rub though I do think the public investor community that gets IAC, gets us and what it is that we do because we've demonstrated such a strong track record of running our playbook, that they get it. 

We deliver strong results to our shareholders. We have for 15 years, if you look at our performance, but that growth has come in different ways from different businesses and different points of their maturity. 

Vimeo is a great example. We're going to deliver a ton of shareholder value from a business that we really acquired by accident over 15 years ago and harvested and grew it and transformed it into now a multi-billion dollar business. 

If you look 5 years ago, maybe you wouldn't be clear on this outcome and what a great investor return it has been.

But our investors have given us or given our performance, give us the flexibility and the benefit of the doubt that we are smart stewards of capital and can take a long-term view in building businesses is our core expertise. 

Stay true to your vision. 

We haven't strayed from it. I've only been here a year, but that legacy really imbues everything that we do.

We look at what's happened in the past, rethink it, and it does form our view going forward. So we don't have to think history is going to repeat itself a hundred times over, of course, it won't. 

But using past experience to color our view on what might happen in other industries has certainly been a great pattern.

And you can point to many similarities between what we accomplished and Expedia, Ticketmaster, etc to know that consumer marketplaces is the theme that I see. But to distill that down as our only strategy would be probably too simplistic. 

How did you get into M&A? Like what drew you in and got you interested in this field?

I had an undergraduate business degree so I studied business at Michigan. It's a three-year program. It's now a four-year program.

Exactly the same coursework that you would have as a BBA, as an MBA. So you learn accounting, finance, marketing, then you need to find a job after you graduate. 

So I stumbled upon M&A and really through investment banking. I was attracted to investment banking because of the fast-paced feel culture that I believe that to be based on description didn't know what I was doing.

I'm much less at the time this was 10 years ago, much less, probably because of lack of internet at the time. So I read less about exactly what it means to be an investment banking analyst, except that I knew that it was fast-paced, highly intellectually stimulating. 

Other ambitious people who hoped that it would be a platform to do something else or you can say as a lifelong banker, that was less attractive to me. 

When I was in investment banking, I was in a sector-focused group, which was consumer retail. 

I wanted to learn everything about doing deals within that sector that fascinated me becoming an expert and consumer deal-making and that ecosystem just always says, follow your passion.

What naturally comes to you that you naturally think is interesting, it was always consumer for me. M&A was a piece of the strategy of most of these companies that I just thought was faster. 

Maybe I'm just like a speed freak. I'm really not, but a faster way to develop visions and strategies, right? Like you see these businesses with these five-year plans and developing all these bulls organically. 

And then some companies are masters of M&A, they just see the future and they can get there that much faster and accelerate their growth by acquiring other businesses. 

So that speed and that excitement really attracted me. It was all grounded in this is an industry I really liked. I like to read about it outside of my day job. I like to follow what was happening on the deal block. 

For anyone who is thinking about a career in M&A, and where they want to go, sure be pragmatic and think of where the industry is going, but go on a deal book and focus on the deals that you like reading about. 

What naturally is interesting to you and follow that intuition, because I think so often we're told to not follow your intuition.

Do what makes more sense? What's most practical or where all the dollars are heading right now? What's best for your future career sometimes leaves you astray. Should just stick with what you think is fundamentally interesting to you. 

What do you love about being M&A? 

It is a fascinating place to be. You can learn so much by looking at a deal that would take you years as an operator to learn.

Maybe my operator, colleagues will disagree, but I think you just get a crash course in the industry by looking at a deal, right? 

Because immediately you have to understand all the dynamics at play for a company where they fit within the competitive landscape, what their strategy is? And you can read that through their financial statements.

It's such a good way to distill down the value of the business. So you're looking at how should I value this business? You need to know everything to value a business. You need to understand their strategy. 

I'm being repetitive at this point, but that's what I love about it. It's a crash course and you have to come to a decision at the end of it. 

I liked the finality of it. The deal process to me offers a lot in that there's a time horizon generally competitive. Through that process, you learn so much just by sheer effort. Can't get to the answer without knowing everything that comes before it. 

And I can't say that I've worked in so many industries outside of M&A since most of what I've done has but I've spoken to enough people who have done different product functions where I think it's hard to get to that speed of learning and tons of career paths. 

What do you dislike about being an M&A? 

That's a good question. Probably the same thing, very demanding. It happens on a timeline that you can often not control. It's highly competitive. It attracts people who tend to like the same things about it so that it's fast-paced and I have to move at a quick clip. 

It requires a lot of dedication and rigor in terms of not just getting to this place where you can evaluate a deal, but all the work that goes into becoming an M&A professional, there's a lot.

There's not a state where you get to in M&A where you can just cruise because it's always the next challenge and the next deal.

And maybe that's what is so attractive about it to me is you're always learning. But with that comes as you can imagine, it's just pressure. 

Advice you'd give to those interested in pursuing a career in M&A? 

Look inside of number one, why? What drives you? It used to be when I was in college, you're really analytical or you, I feel like analytical skill was like the number one thing that they would say is needed to have a job in M&A.

That’s just the baseline, like being analytical is great but there are so many things that you have to look inside to see if you'd like this career fundamentally because there are many things you can do with an analytical skill set. 

Talk to people who are in the field, what their nine to five or who has a nine to five, what their workday looks like? What were the steps to get to what they're doing now?

And if it sounds like a challenge that you want to do then read all you can, then spend all of your time reading about what's happening in the market. The great thing about M&A is there's a full public landscape of business news for and now it's even more pervasive. 

You have young people. In fact, kids reading about investing in podcasts and in business news articles as young as eight, which is wonderful.

Maybe that the tools were always there and I just didn't see them, but I think it's great. The amount of democratization that's happened and investing, and you should use those toolsets to get you up to speed. 

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

The craziest thing is what's happening right now with the speed of investment capital being deployed by some of the top-tier VCs. There's been a lot spoken about just the pace and it's an investment strategy in and of itself is just speed.

It speaks to how competitive the landscape is currently? How much conviction there is in a lot of these industries that are being disrupted by tech? 

And that you can really differentiate yourself by being faster and more decisive, which was not always the case. It was who was the best at identifying an opportunity but then doing the work and the fundamental work to get a deal.

And that was a process and there were rules to play by and there are firms who are just plucking the trend by saying, no, we'll make a bet much faster. We'll get to a decision such that the company wants to work with us because we were that much more decisive. 

And you're seeing this unfold at a grand scale, which has real implications for strategics, for other sources of growth capital for private equity. And this no rule world will continue. 

People will find other rules that don't apply and try to exploit them and get a competitive edge in that way. 

I love thinking about what your edge is, right? And I worked in private equity. Often when funds raise capital, you have to talk to them. What are your edges in winning a deal?

I think about it all the time. Now, probably at a grander scale is where a strategic, but also a holding company and we're competing against many different capital allocators. And so the edge is so important. 

And the way to get an edge is not just clear-cut anymore. It used to be a longstanding reputation and brand and total dollars.

There are so many ways to find an edge in this new normal. You’re going to see a lot of companies finding new ways to find their competitive differentiators 

I wish I had tenure. I could jump forward in time and see what M&A looks like 10 years from now.

Technology and systems will certainly have a key role in playing how people find an edge. You've seen that in the public markets, of course, years ago. 

You have seen it less in private markets, but I suspect that a similar story will unfold in private markets. It's happening already, but not at the scale that it has in public markets.

Ending Credits

Thank you for taking the time to explore the world of M&A with our podcast, please subscribe for more content conversations with industry leaders. 

If you like our podcast, please support us by leaving a five-star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by email at it's kison@dealroom.net.  

M&A Science is sponsored by Dealroom, a project management solution for mergers and acquisitions. Additional educational content is available on Dealroom'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. 


Show Full Transcript
Collapse Transcript
Join our M&A community
Get weekly updates about our upcoming podcasts, webinars and events!
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.