episode 

How to Modernize IMO / Building a Synergy Plan that Actually Delivers

Jonathan Shiery

Bill Clarkin

Teams are trying to figure out how to modernize IMO, and how to build a synergy plan that actually delivers. In this session, Jonathan and Bill discuss bench strength, creating the right IMO team, tips for modernizing, and more.

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 Modernize IMO / Building a Synergy Plan that Actually Delivers

27 Aug
with 
Jonathan Shiery
Bill Clarkin
Or Listen On:

How to Modernize IMO / Building a Synergy Plan that Actually Delivers

How to Modernize IMO / Building a Synergy Plan that Actually Delivers

We're sharing an interview we had in our M&A virtual conference that talks about how to modernize IMO, and building a synergy plan that actually delivers. This interview was hosted by Jonathan Shiery, Director at Guidehouse, with the guest panel Bill Clarkin, Head, M&A at BMO Financial Group.

They discuss the seven principles you should follow in order to modernize IMO including flexibility, the importance of documentation, and setting a hard deadline. Learn from their extensive and impressive backgrounds and hear about experiences they've learned from that you can avoid.

How to Modernize IMO: Flex Ready and Best Practices

IMO, or Integration Management Office, serves as the “Grand Central Station” for each acquisition, working to be a connection point and aligning force for stakeholders throughout the  deal stages, especially integration. For larger serial acquirers, the IMO can be a permanent, full time unit; however, this is most often not the case so those traditionally part of the IMO must be able to “flex” and jump into action quickly.

Just as athletes train in the off season, IMO team members in waiting must keep their muscles sharp and remain familiar with the principles and plays that both modernize IMO and help them build a plan that wins powerful results. 

For additional resources about how to modernize and rethink integration, check out this webinar "Why Everything You've Been Told About Integration is Wrong."

IMO Principle #1: Bench Strength Creates Rapid Flexibility

IMO team members can develop their own spring training via quarterly checkpoints and check-ins that involve test plays; one benefit of this is establishing a cadence. Better yet, for IMO leaders, this provides opportunities to early, and fairly easily, identify who their “go to” people are.

What bench strength skills and talents should integration management office leaders be looking for?

Patience (in terms of understanding there are certain things during a deal that are out of your control) and a steady personality (someone who does not let emotions get too high or too low - you do not want someone who will add stress during an already stressful time) are key.

Team members should be able to dig into the details, without losing sight of the team’s big picture/goal. It should also be noted, depending upon the deal, you might want specific technical skills on your bench.

Finally, being ready to flex and building a powerful bench also means keeping your M&A muscle strong by reviewing past deals. When teams only focus on the current deal and then disperse, they weaken their M&A muscle and lose out on valuable information. Overall, it is clear in today’s market and business world, it is critical for the IMO team to be ready and resilient. 

IMO Principle #2: The Pen is Mightier Than the Sword

Perhaps the best way to early on set up an integration management office for success is to have the IMO leader have a seat at the table. The IMO leader must be privy to the information and conversations taking place from the very beginning of deal discussions.

Additionally, this leader must foster a robust relationship with legal as a deal moves toward negotiations; this means documenting everything and having everything cleared by legal. Relating back to principle #1, here again you cannot be led by emotion - you must use the power of the pen to establish your effectiveness. 

IMO Principle #3: Climb the Mountain

After the deal is announced, you begin climbing the mountain.

What does this mean?

It means the work taking place is not easy work - it involves long hours, can involve a great deal of travel, and might not be for everyone. Expert practitioners caution that a work/life balance must be struck here. This does not mean that climbing the mountain is without benefits; it also involves meeting new people and providing opportunities to learn new cultures and technologies.

A pro-tip here is that the leader of the integration management office should invite some of these new people to lunch to build trust and develop a good working relationship with them. On the downside of climbing the mountain, you may have people who are not aligned with the goals and skill sets you need to reach the peak.

What happens in these situations?

You might have to cut these people loose, especially if trust is broken or expectations are not aligned. This does not mean the overall positive influence of the integration management office leader is weakened.

IMO Principles #4 & #5: Speed is Key and Do Not Delay

Principles 4 & 5 go well together because time works against you in M&A. A tendency during the life cycle of the deal is to delay decisions and fall into the “analysis by paralysis” trap.

Why is keeping pace key?

You must move quickly to capture value; remember, you made the deal for a reason - stay focused on that reason. It is human nature to want to delay because we often think things will get better later on, or we can make a better decision by overanalyzing. Fight against this tendency by staying focused on your target date.

This can be challenging because there will always be some people who say the date is unrealistic, but experienced practitioners still say, “do not delay.

Why?

Delays can take 3-6 months to replan, which adds increased difficulties and challenges to an already challenging time. Being agile and knowing how to problem solve can help you avoid delays. 

The “do not delay” maxim applies to synergies as well. Working towards capturing deal synergies helps build a culture where people are held accountable and everyone is responsible for meeting goals and hitting numbers. 

IMO Principle #6: 80% is the Right Answer

Another way to remain on pace and avoid delays is to follow the motto “80% is the right answer.” Delays are caused by too much information and analysis. Spending that extra 20% analyzing and re-analyzing everything does not equate to higher success or fewer mistakes. 

IMO Principle #7:Talk Isn’t Cheap 

Talk isn’t cheap refers to the atmosphere surrounding a deal that is cultivated by integration management office leadership. As alluded to earlier, keeping a positive attitude is essential as it helps keep others focused and allows for the little victories to be celebrated, which ultimately propels everyone forward.

It is not easy to build a vision and get others to buy into it; in fact, it can take time and money - hence why talk is not cheap. On a related note, having a strong leader aligned with the overarching goals to continue to run the business is also critical.

More specifically, this leader needs to be confident and out in front of the other employees and team members, often emphasizing, “yes we can hit these numbers, we can accomplish our goal.” For optimal success, this individual should be identified early on in the process (preferably by due diligence). 

Final Thoughts

While no two integration management offices are the same, there are overriding principles that can be molded to your IMO team’s specific goals (perhaps “slash and burn” or “take everything and make it our best”) to generate a strategy and, in general, foster a culture that will breed success.

In the end, though, experience is perhaps the best teacher so be sure to document everything, which will allow you to remember what you did, what happened and what was ultimately learned from the deal experience so these learnings can be carried forward.

special guests

Jonathan Shiery
Director at Guidehouse
Bill Clarkin
VP, Head of Data & Analytics at Fiserv

special guests

Jonathan Shiery
Director at Guidehouse
Bill Clarkin
VP, Head of Data & Analytics at Fiserv

Hosted by

Kison Patel
episode 

Episode Transcript

 Intro 

Julia: The topic of discussion is how to modernize IMO and building a synergy plan that actually delivers.

Our speakers for this will be Jonathan Shiery, Director at GuideHouse and Bill Clarkin, Head of  Mergers and Acquisitions at BMO Financial Group. 

Why don't you walk through your M&A experience, the roles that you've had, and then your current role and what you're focused on today?

Bill Clarkin: Thanks Jonathan, Thanks Kison. I appreciate the opportunity to be here and talk with everybody molecules for kindergarten. I mean seems like you're going pretty next level there Jonathan. Kind of surprised by that, but okay. My background so started out in consulting. Did that for a number of years, and then I actually wanted to watch my family grow up and went over to BMO throughout consulting in it.

Then at BMO, I've been involved in a variety of different deals. So when Jonathan said that I've been on both sides. I thought he meant being acquired and being the acquirer which I have been in both of those situations numerous times as well. 

I have gone through everything kind of you could see in an M&A lifecycle. More currently, I am kind of involved in kind of the full suite from beginning to end, as far as target analysis all the way through to making a deal and then the integration that's involved.   

Throughout my career, I've been involved in about 12 different acquisitions that have done the integration on a lot of those. And I've seen portfolio acquisitions as well as full deal, entity acquisitions, and everything in between.

Obviously, i’ve also been involved in some divestitures. You know, I think Jonathan and I are hoping for good Q&A we'll be monitoring the chat, but we'd like to kind of make this as interactive as possible, but hopefully you'll take away a few things that we've learned throughout our time and we can have a good productive hour together.

Just to kick off from the highest level, what is the role of an IMO and how do you view that?Does it change on the deal or is it generally a same approach, same type of role in scope from deal to deal?

Bill Clarkin: To me an IMO is kind of your center point. It is kind of the grand central station or an acquisition and kind of all points come into and go out of the IMO. It's not as though we're trying to be micromanaged or involved in all of it, but we're trying to be that connection point and make sure that  we can drive that.

As far as your second question John then is each IMO the same. I'd go the opposite and say, each IMO is completely different. You have to take the IMO and you've got to kind of cultivate the strategy of both the business as well as, why you're doing that deal to establish what the purpose of the IMO is. 

There are IMOs that I've been a part of that are kind of slash and burn, there are IMOs that I've been a part of that are much more. I mean, almost the opposite of that continuum that are. 

Take everything that we've just acquired and make that our best of breed, and figure out how we can kind of drive every synergy and every opportunity out of that.

And so, I think how you structure and how you build the IMO then becomes important based on kind of understanding not only the strategy the acquisition is, but the strategy of the business at the time is as well. 

Because one of those on-ramps or one of those train depots that's coming into your grand central station should be from the ongoing strategy and the ongoing business plan and how you integrate into that.

And the IMO itself is that an organization that stays permanent through the cycles because every company has up and down cycles of M&A sometimes are acquiring sometimes are not. Is that a full-time role in full-time organization? 

Bill Clarkin: Yes. I mean, that's a good opportunity for me to get my first caveat which is, I'm a banker. I've been a banker my whole career so my experience is going to be specific to banking, but I think for M&A it applies pretty broadly in most cases. But I do think that brings up a good point. So a company like GE in their heyday, they would have a permanent acquisition team because they were a serial acquirer, and there are some very large companies that do have that permanency of their IMO and other acquisition teams. 

But I think most organizations, BMO’s no small company, I think most organizations may have a few people dabbling in it, but it has to be more of an accordion where you're flexing as you start to ramp up or as you think you're going to be ramping up on an acquisition. You need to kind of flex on that and be able to add that, but that sort of gets to that first principle and I'm sure that's where you're going to go next, Jonathan. So I'll let you go there before I start diving into that. 

As you go into the first principle and the bench strength creates rapid flexibility. You know, this does tie into what the IMO look like or a modern IMO's ability to flex as you go into a larger deal cycle or more rapid than decreasing. Tell us a little bit about this principle and how you think it applies to organizations and how they should look at it?

Bill Clarkin:  You're never going to be able to have a permanent kind of IMO team. You've gotta be able to flex with that. Like anybody in any part of your body. It's a muscle you've got to kind of train it.

So what I found is a good procedure, is to ensure that everybody's ready. Is having quarterly or even semi-annual checkpoints where you do test some of the playbooks test, some of the event preparedness and our due diligence pieces. We have gotten into that kind of cadence over the last couple of years.

And that’s help, you now know who your go-to points are. People may rotate in and rotate out, but at least you can start to train them and train that muscle. I think that's important. 

And then having a good speed dial, having those people that you know are going to be your go-to people, as you get into a deeper due diligence, you've got to determine how you start to involve people.

My general principle is involved in as early as possible. But how you're going to start to be able to involve people and how those people can get involved very quickly, but have that speed dial, make sure you know who you're going to call and who you need to involve from each area.

Be it finance or operations or technology or a certain business unit. Make sure you know who your point people are and who to involve there.

The other piece that I wanted to talk to is elephant hunters and we almost use this, but elephant hunters tend to start sometimes, but elephant hunters, when you're looking for the big deal, it's not like we're selling one widget at a time or anything like that. People will forget about you and it's on you.

If you're kind of that point person for your organization to keep those contacts alive, make sure they're keeping that maybe not funnel-low, but always run in their thoughts and thinking about how they can do that. I've been able to generate a lot of different solutions. Or possible solution that we'll be able to use by staying in contact with people where they say you don't build ramp implementing this, but I see it applying to an acquisition and here's how we would do this, or we're going to build it this way, so that we can quickly convert the data onto this new platform.

And we'll still have kind of that conversion layer. We just plug right into that and it'll be able to go onboard very quickly. You exercise that muscle and you help people stay fit and they'll help you as well. 

Jonathan Shiree: You said a lot in that statement. And one of the areas as we talk about modernizing the IMO, the traditional IMO that I had seen throughout my experience, had really been focused on. You’re  doing the current deals.

If you're in the acquisition mode, you've got your team there. You're going from deal to deal and then after it's all done, you disperse and there's nobody else left. Then you have this loss of institutional knowledge and these kinds of muscles around M&A and in a new modern world, which fits really well into Kison's Agile M&A, I believe.

This kind of accordion principle that you were talking about plays away in order to flex. So you go smaller when you're not in the IMO, but you still keep some of those muscles, exercise and trained and are ready to respond and be resilient, which I think is  key theme of today's world, right?

You have to be resilient. What I really like about your principle is it keeps into these three takeaways as well. You mentioned each deal is a little different and integration is challenging. Only certain people are cut out for us. When you think about your bench strength and you're looking around and you're keeping the context. 

What are the types of skills, the type of talent that you're really trying to measure and make sure that it's around in the event, that there is an elephant that comes your way?

Bill Clarkin: I think it's a great point. I want to touch on one other thing before I get to that which is,  COVID has certainly had its challenges. It's also had its benefits and I think everybody's found some silver linings into it. M&A would be one of those and that, I think we've learned a lot about how we can work together.

A lot of times you're doing the deals across the country or across the world. You can't be there all the time. And I think we've learned a little bit how we can work a little bit differently on some of that stuff. I think we've also learned how to be a little bit more flexible and how to be a little bit more distributed in our decision-making on some of this stuff, because we've just frankly had to, and I'm hoping that has developed some muscles for people that typically aren't involved in acquisition. 

But,, maybe have a peripheral role because they have experienced something at lightning speed, which is typically what acquisitions are. To get to your other points, now I can't remember where the point was they wanted to make that.

The skill sets I think they're important. I've said this a hundred times, but acquisition work and M&A work is not for everybody. Most everybody seems to want to do it. It looks like there is a fascination with it until some people get involved in it, but it's not for everybody.

And maybe early in my career, it wasn't for me. Maybe I've matured in some of this stuff. I think there is  a patience side to it. Not that you need to go slow and we'll talk about that later, you've got to understand that there are certain things that you can't control, because there's two parties, and that other party is not part of your company, at least not initially.

So you've got to negotiate. You've gotta be patient on some of that stuff. I think it's a steady personality that doesn't get too high or doesn't get too low that isn't afraid to want to understand the big picture, but also roll up their sleeves and understand the details and get into those details.

I think that's really the strength that I bring to this. Then, also, you can't add stress. I know early in my career, I was definitely labeled a bull in the China shop. You can't do that. You've got to understand and keep that level of water because there is a lot of stress involved in these to begin with, because of the timeline, because of the dollars at stake, because of what was paid for those, because of frankly, change management and new people being introduced into the organization, you can't add stress.

You’ve got to look at those people. Are those kinds of steady waters within the ship. And you've got to look at those people that really know their stuff. That gets back to the big picture, but also being able to roll up into the details. They've got to be able to do both because you're going to need to do both and you really need  to do both in short order.

What type of technical skills has agile kind of functional methodology knowledge, as well as technical data analytics or other type of skills that have become so predominant out there, are those playing a bigger role in the modern IMO? Do you, do you see that starting to occur?

Bill Clarkin: Yeah, the agile stuff is interesting.

We all want to be agile, we want to do that. It's a little bit interesting when you're doing an acquisition because. It is a one-time thing you convert or you integrate it and you're done, right? So there isn't this constant iteration. There are ways that you can be agile and manage that.

The bigger thing and the bigger principle that I've seen from a technology standpoint is really thinking about the reuse, not even if you're going to be a serial acquirer, but if you're going to be somebody who requires on a regular basis and more of that periodic basis like Nimo does, it's very important to be able to try and build things once, but you can reuse many.

That gets back to that earlier point. Some of these groups have now started to try and build things that we can quickly connect to, and quickly integrate with. That’s a critical piece too, this is how can we do that? And how can we use the technology the best we can. 

The other one that I'm most interested in, and frankly, haven't had that much chance to really operationalize it. I spent a lot of time studying it, get a lot of good prototypes and principles, is the robotics. There is great opportunity in robotics to do some of this stuff, be it from legal contract review and having some of that language translation and language review.

So you can search out certain terms like poison pills and termination clauses, and really help the legal team help themselves. I think that's one example, but I've got countless examples of the robotics that I think is another kind of example of how we can modernize the IMO. 

The pen is mightier than the sword, and you're sitting in a negotiation. How do you set an IMO up for success in the upfront negotiations? 

Bill Clarkin: First and foremost, make sure the IMO has a seat at the table. Whoever's going to be running the IMO needs to have a seat at the table.

I've been called in after we negotiated the deal. You're always drinking from a fire hose, but now you're drinking from a fire hose and you don't know any of the history. I think that's an important principle there, but to get to the pen is mightier than the sword I told you earlier. I definitely was categorized as a bull in a China shop at points in my career.

You need to really love your legal friends. Document everything you're dealing with another party that's trying to get the best value that they can as well. It's got their agendas and you can't really control those agendas. You need to document the meetings. You need to document each agreement and make sure that things are cleared by legal.

But use the pen fighting those battles with emotions and everything else. Sometimes it can be fun and chews up the adrenaline. But  at the end of the day, the practical idea is to use the pen. Make sure you're documenting, make sure you're putting everything out there and you've got to document every little piece, right?

Especially if it’s something that there's going to be an ongoing relationship with the company you're acquiring and you'd go to TSA. Understanding all of those, and understanding the flexibility that you need in that TSA to be able to add and subtract things and what those processes are.

I think those are all important and make sure you negotiate what you can for you and your organization. Those organizations are out for their best interests, but don't put things in there that are very difficult to prove because it'll always come back. You can't prove it. We had a couple situations where we had elevator clauses and things like that.

And we felt it was because both parties didn't make the deadlines and so there shouldn't have been an elevator clause, but the elevator clause was in there and it was pretty cut and dry. So we ended up having to go down that route. That's a lesson learned, so we'll move on from it. 

Does that typically happen in areas of HR, like around the people part of it? What other areas have you seen within the negotiation stage that tend to be a headache later on as you're trying to integrate or keep a divestiture or what have you moving forward?

Bill Clarkin: Yeah, the HR ones are an important and interesting one because you have a lot of different people moving over. Both organizations, at least most or the identified of. I'm not Richard here for pretty women or anything. So we're not trying to burn too often, but we are really trying to look out for the best interests of the people.

The company is selling in most cases that I've been involved with is also trying to do that. Generally we come to pretty good agreements, but things like severance packages, things like some of the small little fringe benefits that people have, that maybe we don't offer to where our current base and how you negotiate that, and how you handle that and how you frankly transition off some of that stuff is important.

We're always trying to think through the human side of it. But to answer your question. It is the technology that also has a lot of this negotiation independence really important because that lasts a lot longer than normally on day one or shortly thereafter after the employees become employees on your system.

And then you start working on that change management piece. But the technology is probably going to take, somewhere between nine and 18 months to convert fully. You’re going to have to have a good understanding of  what the uptimes are supposed to be, what the SLAs are supposed to be, what their responsibilities are in the conversion processes, how we work through a lot of that stuff.

It all depends, right? It depends on how quickly the deal's consummated, how quickly you take ownership of the systems and in some cases you may just lift and shift those systems. And then you've got to figure out what you're going to do with them, in an entity situation, all in the whole entity and their system.

So that something you can take more time on, think about in an asset situation. There may be more negotiation that you've got to pay attention to with some of those technology pieces. 

Jonathan Shiree: And our experiences as well when you start looking at the actual integration side of meeting those  agreements, especially in today's environment where it does look like a lot of the acquisitions are going to be less around growth strategy.

Although you're growing as you're buying, you're going to probably be buying at times some distressed assets or some distressed companies. And those companies are in fire sales. And guess what happens with people that are working at a company that knows they're in a fire sale, they're looking for other jobs.

And they're losing people or trying to deal with the latest, balance sheet issue while you've just bought part of their company. And, when it comes to whether they're going to try to deal with, keeping their companies surviving or just making it through without going bankrupt versus, making sure your TSA has been adhered to.

It's really interesting to see a lot of the difference in priorities and how that starts to diverge across the two companies. We’ve seen a lot of challenges there and the capacity to make sure that they have a plan around that. If they're in that type of area is a really important question to flush out or else you can end up in a bad situation real quick.

Bill Clarkin: Yeah, it's actually just real brief point on that, but it fits with the pen is mightier than the sword. That adds another component where you've got to write it down, but get people on retention agreements, especially if you think there's a high risk supply or they're a critical resource for whatever purposes you need.

It'll cost you a little bit in the beginning, but it won't cost you at the end. You need those critical resources and sign them off. 

Jonathan Shiree: Now you've made a negotiation and assuming that you know we've gotten the pen and detail and we've set the modern IMO in a position of success. You've had the bench strength.

You start looking at the integration and the deals just been announced and you start climbing that mountain. 

What does that principle mean to you in today's world? and how do you start to build the vision of going up something that's going to be such a challenge and it's going to be a rollercoaster of emotions and events along the way?

Bill Clarkin: This gets to a little bit of your earlier question and what are the right skill sets? What I mean by climbing the mountain is, this isn't easy work. It's not cut out for everybody, but it's not easy work. You're going to be working a lot of hours, working a lot of off hours and traveling a lot.

It's not for everybody. So it does get to that. Stay fit idea. Make sure that you're paying attention to yourself though, as well. You do have to find a life balance associated with this. I think that's really important. I think that's important in anything. And I think I'm very good at that. I've seen plenty of people that just throw themselves into this and kind of hate themselves afterwards.

Make sure you do that. The other principle that I would say is embrace the journey. It's fun work. If you let it be, you get to meet new people and you're dealing with new stuff, frankly, you're not hiding the investment plan nearly as much because. It's already built into the acquisition and a lot of times can do a lot of cool stuff.

It’s a great opportunity for learning, developing yourself, learning new things, learning new people, learning culture, learning new technologies. Those are all great. That’s really important. 

On the downside,. this is something I, we all continually learn this lesson, but there are specific skill sets and ,there are people that are not aligned to those skillsets. 

You've got to learn to cut bait, you gotta learn to move on from certain resources depending on you know which people are listening and if it's any of the consultants I've worked with, they might say that that's something that I do very  well.

There have been situations. I recall one where I had just let one consultant go and I was getting a reputation, was worried about that for whatever reason. Then this consultant, first day on the job, they have a consulting.This is while I'm at BMO. They’re a consultant to us.

They have a company function or somebody overserved, certainly was overserved, and missed meetings. The next day after, I said, okay we’re going to start transitioning this stuff to you, and I felt like I had too much of a chainsaw Al mentality. 

By the way, I apologize for some of my dated references between pretty woman and chainsaw Al but people in my age group will know what I'm referring to.

I hesitated to let that person go, and they stuck around, they did find work, but I could never trust them again and I never would sit in the meetings with them. I would just always make sure, one of their management team was managing them for me, but I could never trust that person again.

You gotta make sure that you cut bait with people that you don't feel are fitting into what your vision is, and what you feel you need for the different roles. 

How important is trust in climbing that mountain? How much does that play as your previous working experience with others or the trust that you build quickly with the acquired target in order to make that journey?

Bill Clarkin: I think it's critical whether it's an M&A time or one other I'm doing something else.One of the techniques that I've always done is I never eat lunch at my desk. 

I always try to, and it's exhausting because I'm almost always the one trying to make the lunch dates. But I almost always have lunch out of the building with one or more people, try and catch up on stuff and try to get to know.

And when you're at the beginning of an M&A, there are times where I'm eating my lunch at my desk, but I do really try to stick to that principle. And at the beginning, I tried to stick to that principle where I'm inviting people that I don't know that well out. 

There are people that I get deep trust in and we probably don't need to go out and we'll probably go out plenty anyhow, but those new people. I need to really understand them, and they need to understand me, and we need to have a good working process. I

I think that it's really important to trust the process. The other thing, that kind of along people's personalities and stuff, as one of the leaders in the IMO, and one of the leaders of the acquisition.

Don't stop believing. Most people know that there's gotta be a positive influence and a person that always is saying, yes, we can. I don't care what it is , were gonna make it, because a lot of people can get it down and you've got to have those cheerleaders, those people that can pick people up and push them.

And that's certainly a role that I've played at times to the point where there's some means or some things people can make fun of me for. 

Jonathan Shiree: When you look at climbing the mountain, when you take the second part, which is the base camp of a mountain, right? And those are almost the milestones as you're moving up. You have this team, you've built a team that you trust. You're moving up. Are the base camps your milestones in the traditional MNA process, which is you've always heard here day 100, legal day one, legal event day one..

Are those still the right milestones? They coincide with some of the discussions you and I have had on how to accelerate the integration and really meet it within a time period of say a year and have a fully integrated team, where should those milestones start to be considered differently? 

Bill Clarkin: A lot of them are still the same.

You're going to have an announcement. You're gonna have a legal day one. We actually did it for day one because of some HR constraints. To the earlier point, it really worked out to the benefit of our employees or new employees. In that it didn't create hassles around benefits.

It didn't create hassles around enrolling twice and things like that. We actually delayed the employee cut over, to allow for some of that. The First Hundred Days, which is a great book, That really applies to M&A, and that you've got to get a lot of things in place in those first hundred days.

The lesson I always remember from that book is, making sure you've got the long-term leadership team in place. You've got to do that quickly so you can start making decisions, start moving forward. As you get further,  if you've got some iterations and some agile pieces, I think that's important.

Where I would really say there's a big difference is it gets to knowing your strategy and knowing what you're trying to do with the acquisition. There’s roughly three approaches you can take, you can do kind of the traditional waterfall approach. And, sometimes that's helpful and useful that normally ends in a big bang.

And sometimes that's what has to happen because there's so much system integration and there's so many different overlapping pieces. You've got to do that, but you can also do, kind of a phased integration. And that to me is,  maybe we can work 10 branches and convert 10 sites or we do some small chunks and you do, minimizing your risk learning as you go.

That is an approach and that has different milestones associated with it. The third one is what I'll call a tiered approach which is, you may be able to convert certain systems at once or at certain time periods rather than having all of them in a big bang. We did this, two acquisitions where we did one portion of the acquisition. Six months out, we did the second portion 12 months out.

It really didn't limit our risk, and converted half the business and then the other half of the business. And that was helpful, but each of those has its own kind of pros and cons. And that could be, a whole lot discussion of it all.

Jonathan Shiree: For sure. And that probably goes into the next two principles very well, because as you're trying to figure out what is the best integration strategy and the approach to each target, you've got two other things that are going against you.

One is  time, which speed is key and then you also don't want to have analysis by paralysis. And you don't want to delay so you need to be able to move forward. 

How do those two principles play into your thoughts as you're going through a deal, and you're assessing it or you're moving into the integration?

Bill Clarkin: I like to run fast, not a runner, but I like to run fast. I guess I like to bike. You got to go quick. One, you've made this deal for certain businesses, business strategy purposes. 

If you want to start getting the values, you want to read the value. Two, it's human nature. I have found to want to delay and to think that, Oh man, we can get this better and we can do this.

Resist that temptation. You got to set a date, you got to go, and you've got to go hard at that date. 

It reminds me of, the file, my favorite case from business school, but it was the CEO of Honda motor Corp and he laid out ambitious goals into the US and none of his direct reports, nobody at the company thought it was realistic and I'm not comparing acquisitions necessarily to building a eight Goliath like Honda motor Corp.

He put it out there and then, a date that everybody thought was unrealistic. Then they achieved it. You saw that momentum building as they got towards that goal. The same can be true about acquisitions because I guarantee you, when you lay out the date, I guarantee you, 75% or more of the people are going to tell, you can't hit that date.

We need to delay, it's going to be a large number of the people are going to say, what are you thinking with that date? Stick to that date, stick to your guns. You can always delay, but don't delay until you absolutely have to, but that does get back to that gets back to 0.5. Don't delay.

It'll take you three to six months just to replan, once you've got the delay and then, then you've got to do whatever work you're delaying for. It is too difficult. It's too challenging. Obviously there are going to be certain situations where you're going to have to delay, but if at all possible go and go hard. Find a way to get through that. 

I like movies I've quoted a couple already, but there will be blood. There is always blood in this. There are always challenges. You've got to be able to patch those up and move forward, and being agile, being nimble, being willing  to deal with that and know how to triage that problem solving, is one of those skill sets I should have mentioned earlier that you've got to have good problem solve with people that are just going to figure things out, regardless of what's going on.

Those would be some of the concepts I'd have on those two points Jonathan

Jonathan Shiree: As you're talking through that, that might allow us to bring in the synergy plan a little bit into this part of the discussion because, one of the areas and I told you, 

I've always been fascinated by how many people, whenever I'm on the ground, talking about integration, have no idea around what are the actual synergies or the deal rationale in the first place.

They’ve never read that industrial presentation, which sits out there on some Corp dev website, for the company. I always find that interesting. But yet, a lot of those synergies are really upfront and some of them are around getting quick wins in there and moving forward fast.

Is there a place around building that synergy plan that allows you to really trigger the speed and prevent you from delaying and create a sense of urgency in the organization? And would that be an effective tool for getting everybody moving in the same direction? 

Bill Clarkin: Yeah. It allows you to bring the entire organization into it because this is going to be part of their plan and part of their process, and part of their financial plan.

When you talk about speed is key and do not delay, that applies to the synergies. Don’t delay in putting them into the overall financial plan in the overall business point. Make sure people understand that you're going to have to hit these numbers as well. And it's your normal run rate numbers.

This is why we've made the second session synergy, and doing that as quickly as possible. It’s important, one, to build the culture and say, this is part of us and this is part of our DNA, but to take everyone speed to the fire and make sure that they understand. We all have to believe in these numbers.

We all have to live these numbers and we all have to hit these goals. We're all in this boat together. So those are important pieces. 

What is your view on allowing yourself to get to the 80% and moving forward so that you don't delay, and how do you practically get everybody on that board and getting away from the over-analysis?

Bill Clarkin: Everybody likes to overanalyze, and this is new stuff. So it's cool that we want to take a look at it and all that. We'll go back to principle four and principle five. Don't delay, speed is key. You've got to have quick decision-makers, you've got to have everybody at the table when you're making the decisions..

Way too often, we need to have five meetings in order to get the decision. One, try and break down as much of the hierarchy is here. Have quick decisions, that's part of why you select the team that you do. Have those people in place, that gets to that a hundred-day milestone, but have the long term owners at the tables so that we can make the decision quickly and move forward.

But yeah, use the data to make the decision and you're going to get some of them wrong, 80% doesn't mean I'm a hundred percent confident on this decision, but I guarantee you make decisions quickly. 

You're going to get there a lot quicker to the end game. There might be a few more mistakes than if you spent time getting to 100% on every answer, but there won't be a lot more mistakes.

There’s been plenty of answers that I've seen. People try to get to a hundred percent and they still get the answer wrong. They might have a little bit higher competence in verbal, but that extra 20% does not equate to a much higher confidence interval. 

Jonathan Shiree: The 80% is the right answer. Do you think that there's too much analysis due to consensus decision-making verse? There was a principle that we discussed, at one throat to choke, like the single accountability.

If you have the decision-making power and you can make that decision. 

Do you think people tend to make the decision faster with less information versus 10 different perspectives around that decision, which means that you analyze it longer and potentially don't actually create any more additional value on that actual final decision?

Bill Clarkin: Yeah I do. That gets back to my point about coronavirus early on in this discussion. That really has, hopefully changed us a little bit and that we can empower people a little bit more in app single point decision makers, you have to move quickly and we can. That is very important throughout this process and, you need that single approach chokes, it's an operations question.

You need to know who you go to, and get to that answer. If something bubbles up, if there's a problem, who to involve and how do we mobilize quickly and then that person. He or she, and take it, and go with it, and they may need to delegate it to some of their team members, but you've got to be able to push that two single points that you know can deliver.

So yeah, that single choke is something that I like to live by whether it's in M&A or, or in other roles. 

Jonathan Shiree: How do you build a synergy plan? We talked about,  having that in a dashboard. having it integrated, having accountability?

The one thing I’ve never really been able to get my head around, and it's an area perspective that I've started to take is why aren't synergy plans treated more like, project plans and the original objective of the deal.

So for instance, the easiest example I use is if you're trying to reduce cost by a thousand dollars, and you have 10 days to reduce that by day five. If you haven't reduced it by $500, then you're not on target to hit that synergy. I've never seen at least in the different deals that I've been part of a synergy tracking plan that actually manages it similar to almost as synergies, as micro-projects.

And do you have a view on that or if you've seen it differently in your perspective? 

Bill Clarkin: I don’t think it's done well and I'll throw myself under the bus on that as well, as you and I have talked about it. It's something that I'm exploring and trying to learn. I'm trying to figure out better ways to do it. 

I do think it gets to having those decision-makers at the table and getting them to sign up for the synergies, and making sure they were staying what they're signing through.

But anyway, it’s been through due diligence and have been through a pre-announcement phase.Those that went through a lot of synergies at the wall, and most of them were going to stick because that's what we need to do to make the deal happen. 

The people are signed up for certain things.It’s how do you then think through, okay, what are the creative ways to get there?

What do I need in order to ensure that? A lot of times we can put some certain bells and whistles and can put certain things into a plan. Think about how we build to deliver on those synergies and think about how you get creative and restructure your business or restructure your way of thinking.

Jonathan Shiree: I hope that this creates a natural lead into number seven, which is talk isn't cheap. One of the things that I've seen in M&A deals is, and we've talked a little bit about it, right? Like moving quickly, keeping the dates from making sure that you're, you've got things, you know, upfront negotiated, holding people accountable, but then, you see an M&A deal, and I'll just be honest, I've been on this for 15 years of my career.

And I'm like, Oh, okay,revenue synergies. Yeah. I wonder who just came up with those ones, right? Or you look at a deadline and you're like, yeah, that deadline was just made up. They're going to move it. 

Like they've moved the last 10 deadlines and we're all going to work 14 hour days going up to that deadline and realized the day before that we've got to move it out a month, even though everybody would have realized that already. 

How do you  view talk isn't cheap and how do you keep the integrity or the credibility of the organization as you go through?

I'm being kind of tongue in cheek here a little bit or a little cheeky because, also know there's a lot of reasons why that stuff happens, right? You’re learning a lot as you're going through, what made sense at one point may not make sense anymore after you start to move through it. Yet that context isn't always there when somebody sees that stuff happen.

How do you keep the credibility and integrity of the organization as you're going through these, but yet knowing that you've gotta be flexible and things are gonna change, sometimes for the better? 

Bill Clarkin: What you're saying is similar to what I said earlier, which is you got to kind of keep that positive attitude.

You've got to put that carrot out there and you got to keep people focused on it and marching towards it. And you've got to celebrate the little victories here and there. 

Those will help from that standpoint. It takes an army, and that's where talk isn't cheap. The change management and the communications, building a vision and getting people to buy into the vision and explaining all of that.

It takes money. And often, we forget about that, often it's excluded from an acquisition budget, or it is minimized, but you've got to spend a lot of time on the communication, on the vision, on those pieces. The other thing I've really seen as successful, is having that strong leader that's going to continue to run the business.

If that's coming from the other organization or if it's somebody that you're deploying, it's gotta be a strong leader that's out in front of people often and really displays the confidence, that we know we can do this, we know we can hit these numbers, we know it's daunting, bute have the right team and we can move this forward.

I've seen that in both the good side and the bad side, but, it's obviously a lot much easier when you've got somebody that's really aligned to what you're trying to do and really aligned to what your end goal is, and really want to identify that person while you're looking diligent space, to get somebody who you can quickly deploy and can be there right from the start and is in that mountains.. 

Jonathan Shiree: I’ve had a chance to speak to a lot of different corporate dev departments and one of the things that I've really liked about our discussions, is that you have to have a leader that has a lot of courage to say, like this is where we're good, and this is where we're not.

I’ve heard that  in our discussions, I've always enjoyed those where you've been brutally honest, even on your own self saying, Hey, you know, this is where I've learned some lessons. I might've gone too hard here. And that authenticity is an important part of communication when you're going through an M&A cycle, because people don't expect things to go perfect.

But, when you look at somebody and you say, well, I expected the sky to be blue, but it's purple and they keep saying it's purple with a straight face. You start to lose that kind of trust into everything else that they're saying as well. 

I find especially in today's environment that authentic communication, in today's world, is going to be critical. if not one of the most important aspects of really getting people on board, especially if you have a lot of remote culture starting to happen. 

Bill Clarkin: The  one leader that I'm thinking of that was basically perfect for the role. That was probably his biggest strength, the deal was highly often taken.

You could tell that as soon as he opened his mouth and part of that was. Texas drawl, butI'm not sure. I think it did help, but he was very genuine, very authentic, and that certainly does help. The other side of the talk isn't cheap is, even though the authentic business leader in yourself as the IMO lead, and others that are very close to this, you've got to have those people that you can trust that you can go to.

Outside of that close-knit circle that you can say, does this smell right? Is this right? That maybe aren't as close because often I've found I get too close to the detail, and I skip nine steps because I'm like, well, yeah, that's obvious. Well, it's obvious to me because I've gone through all those nine steps.

It's not very obvious to the person that this is happening to, or the person that we're asking to do this because they can't make those same quantum leaps or even small leaps that I might be making because I've been living and breathing this for, three months, six months, nine months, 12 months, making sure that you've got those sanity points that can say, I don't even understand this Bill. You're skipping a bunch of steps, or I don't understand how you got to this point.

It’s really important because I know that's an area where I have to check myself a lot. I tend to make a lot of those leaps and people don't know how I got there. 

Jonathan Shiree: One final question for you, as you're thinking through that context, as far as communicating and explaining and making sure that everybody's on the same page, 

How important do you believe when it comes to the progress of integration and the overall synergy captures?

Is it to communicate that even outwardly outside of the organization publicly and say like, okay, you saw that investor deck, here's the,, synergies, here's the deal that we were planning to get. Did we really get that? If not here's why, is that something that you find organizations should be doing, are doing, or at least considering?

Bill Clarkin: The synergies is an area that I'd like to continue to enhance on. We clearly go through the lessons learned, And because we've had kind of consistent people in some of our acquisition roles over the last couple of acquisitions, it's helped a lot because they have not only their tribal knowledge that they remember.

But we do have lessons that they've participated in and that they can utilize and leverage and they understand what the context was and why we were thinking about those things. I mean, that gets back to that pen is mightier than the sword. That's a different point on it, but once you're done, you need to document everything so that you can remember it.

We're all getting older, myself certainly, but we've got to relive history. Document, understand what those points are, so you can dust it off. It has saved me countless hours, countless days, countless weeks, because I've been able to do some of that. Two acquisitions ago.

That was one of the key things that we did was, we had documented everything for her prior acquisition and being able to go in there and quickly ramp up. I blew aways some of the project sponsors, the acquisition sponsor. We had the IMO stand up probably in 24 hours. Because we had all the templates already ready.

We had all the reporting that we wanted, we were able to go, and it was brilliant. Establishing those frameworks right now, while you may have some downs, if you're running an IMO or if you have a role or even if you're anticipating or hoping for one of these, think about building some of that stuff at a time and structuring it, and working with some of those other people that build the punch spree to give yourself a leg up and push it forward. 

Thanks so much for listening to this episode of MNA science. If you want to stay up to date on the podcast and all things, M&A science, including our events, make sure you sign up for our weekly newsletter at mascience.com M&A teams that use proven techniques deliver better outcomes. 

Agile M&A is a science-based framework that focuses on responsiveness, adaptability, and continuous improvement. You can view the whole book online for free at agilema.com and if you're still using Excel trackers and old-school virtual data rooms, that charge per page, (what a rip off), I highly recommend taking a look at DealRoom. DealRoom is designed for collaboration with internal and external teams.

Visit dealroom.net to learn more. You'll also find lots of free resources, templates, eBooks guides. Thank you again for listening to M&A science. See you next time.


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