episode 

How To Successfully Execute Deals With A Small Team

Jason Lippert

Do you need a team of dedicated M&A professionals to successfully execute M&A deals? Jason Lippert, CEO of LCI Industries (NYSE : LCII) shares how they were able to conduct M&A deals with a tiny 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 Successfully Execute Deals With A Small Team

19 Jul
with 
Jason Lippert
Or Listen On:

How To Successfully Execute Deals With A Small Team

How To Successfully Execute Deals With A Small Team

Understanding that not everyone can afford to have big M&A teams, I asked Jason, who only has one dedicated M&A person, about how to successfully execute transactions with a small team. Here are some of the highlights:

"Culture and leadership development is the most significant piece of creating a competitive advantage. When your culture is great, more people stay over the long term, and you will end up getting more momentum in the business."- Jason Lippert

Team Structure

Jason never had any formal training regarding acquisitions, so building a team never really occurred to him. They never felt like they needed a bigger team because they only look at four industries. Most of their deals are strategic, so their part-time M&A practitioners will have an idea of how to execute the deal.

Acquiring Leadership

The secret to their deal success is acquiring good leadership. They have discovered through experience that deals are a lot easier to do when they acquire a great leadership team. They even made it a requirement that the acquired company have a solid leadership team before considering doing a deal.

Culture and Leadership Development

Because leadership and culture are extremely important to Jason and their M&A strategy, they spend a lot of time ensuring that they are consistent across their organization. They have 24 individuals dedicated to culture, and leadership development focused on newly acquired companies. This is one of the ways they create value on their acquisitions.

Red Flags

Since their organization is very much focused on leadership, one of the things they really look for is leadership strength. When they see a toxic leadership or culture, they tend to walk away from the deal. Since they have a small M&A team, they won't have the resources and time to enforce massive changes in a company.  

special guests

Jason Lippert
CEO of LCI Industries (NYSE: LCII)

special guests

Jason Lippert
CEO of LCI Industries (NYSE: LCII)

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 is Jason Lippert, CEO of LCI industries. Jason has conducted over 70 acquisitions. Today, we're going to talk about how to successfully execute deals with a small team. 

Can we kick things off with a little background on your M&A experience? 

I was never formally trained, but my family business was acquired by a public company in the late '90s. And it wasn't maybe three years after they gave me the reign that they started letting us make some small acquisitions.

So started with 2 to 5 to $7 million acquisitions, eventually, grew to bigger size deals. A lot more all within our industries that we were doing a lot of business and the manufacturing industries that we were in. That's kind of how we got started doing deals. 

Can you tell me a little bit of difference in terms of how you pursued doing deals and how that might've changed as a public company?

My family had done a couple of small deals when we were private. I wasn't involved with those deals. 

The big difference was that the public company leadership had some more refined and sophisticated metrics around, we probably did things more off the cuff. 

And hey, if it was a good fit and we could see some strategic long-term opportunity and joining forces with somebody, then we would do it.

But all of my deal experience has been on the public side and we've gotten more sophisticated over the years. 

And like I said early on, there were some really small deals in our space, around steel manufacturing. And geographically, people really close to where our home base was in the business. 

Does a public company have a bigger financial model to go through?

Yeah, they were very interested in going down the inorganic growth path and we were growing fine organically, but they wanted us to bolt on the wider competitive mode through some inorganic acquisitions. 

And they gave us some basic parameters. And I was in my twenties at the time. And like I said, I hadn't had any formal training and doing deals and it was something where we just started with some real small deals and learned.

And eventually, the deals got bigger and more meaningful both from a top line and a long-term strategic standpoint. And to the point where now we're doing 2 to $300 million deals in some cases and looking certainly looking at a lot more than we ever had. 

After a company gets acquired, is there an automatic change to the management team that you're a part of?

Yes. Everybody looks at it differently. One of the things we've evolved into in terms of deal evaluation is we found that it's a lot easier to do deals when we acquire a really great leadership team. 

One of our pre-requisites when we make a deal these days, the leadership team has to be solid. And if we decide to do a talk in or in some cases the leadership, they want to exit. They're only gonna sell the deal if they can exit.

And when we want to do those types of deals, we need to make sure that the leadership is available on the mothership side, on the big parent company side, to make sure that we've got people that can slide into place and lead strongly out of the gate. 

So leadership, we either have to have it ready internally, or somebody can fully focus on that or we have to acquire a great leadership with the deal. On other people, they'll scrape and they'll do other things and lean it out but we look at things a little bit differently. 

You’ve done 70 acquisitions, how'd you do it? Did you have a corporate development team assist you? What does that structure look like? 

I didn't have any formal training, building a team around M&A and acquisitions and integration never really heard to us. 

We were just, we saw a company that we liked and we generally went out and approached them, figured out how we were going to integrate, got the deal done. It would be growing some accounting resources internally.

It'd be borrowing some of our other manufacturing and HR and IT and marketing resources and help think about, hey, is this a good fit? How are we going to integrate? 

So there wasn't a lot of there wasn't any at the beginning outside resources or dedicated teams focused on getting deals done.

And we really did that through the better part of 2016. Probably, before we started adding separate resources to help evaluate and get deals done and ultimately integrate. And the team still on our scale, is pretty small compared to the most. 

How many actual dedicated people to M&A do you have between the front end, to doing diligence through integration?

One, it's more of a resource than what we ever have, but they're fully dedicated to evaluating deals. And our deals are mostly strategic. We've got four really key industries that we consider ourselves knee-deep into or waist-deep into. 

So we're only looking at deals in those spaces. We know which ones we want to acquire. So I'll feed the deal or one of my other key team members will feed the deal. 

And so we don't have to sit there and scrape a bunch of books coming from investment banks and things like that, like, a lot of private equities might do. 

We know who we really want. We go after and get them to the table and get them interested. And then that's when our team again, we still borrow resources from all over the company. 

So you could say that there are some people who wear a half hat, they have a full-time job, but when the deal comes up, they've gotta be available and dedicate some resources there. 

The thing I really want to unpack is what were some of the lessons learned along the way? How did it evolve? 

Getting into something really new, those, generally are very difficult to do when you're stepping into a new industry or stepping into a completely new product line. 

We learn how to do better diligence over the years when it comes to not just the leadership team at the top level, but really diving deeper and making sure there's leadership strength all throughout the business. 

Because in manufacturing there's heavy leadership and activity on the front lines of the business. And if we're not checking the leadership down to the front lines then top-level is always going to look okay. 

They're always going to represent and tell a good story, but until you get down to the front lines of the business, we look a little bit closer there. We try to make sure that the business at least comes with a solid top-level leadership team because we can't get in.

And especially some of the sizes of some of the businesses we're buying today, we can't afford to get in and start over, unless we were planning on it. Evaluating the leadership and doing a lot of diligence on the customer side and the product side is really important to us.

I would say those are the key things, not tucking in a lot of deals where we're taking a facility and team and taking them out of their element and trying to pull them into an existing facility where we have moving equipment and people and all the resources that the business is running.

It's just so much easier to keep them standalone. And then not going after something that looks attractive, that's at a really low price, we tend to stay away from those more. If it's a garage sale, we almost tend to look the other way, even if it looks enticing because it's a garage sale for a reason. 

So we try not to get over-reactive around deals that just look like a really good deal unless there's something meaningful there.

What are the red flags? What causes you to turn that distraction?

Really bad leadership or a toxic leader. That takes a long time to fix. And usually, that means that there's a tough culture and those are hard to penetrate sometimes unless you're going to really make some wholesale changes. 

Which again, we do a lot of work and effort and resources that we don't necessarily have the time to dedicate all those resources to if there's not a strong leadership team there. So I'd say that's probably one of the bigger things. 

Can you give me an example, like what would be your indicator of, Hey, there's going to be some leadership issues? 

Yeah. I spend enough time there. You gotta do your homework, you gotta spend time. I do a lot of listening. You can generally tell if I listened to somebody long enough If the stories were real if it's good.

And then I say, introduce your team and let's poke around the team and see what the team thinks and how good is the team? How long has the team been together? 

That's usually the team's been together for a very short period of time, it's likely that there's not a lot of chemistry there and there might be some opportunities. But generally, if the leadership seems toxic if the culture seems toxic, it makes it a tough go.

We look for growth trends. So we got to see a path of aggressive growth, not just maintaining what you've got. It's like where is the growth path? And generally, that comes around really good innovation departments. 

So if you're not innovating, we're probably less interested. It doesn't mean that we're not interested at all, but if you don't innovate and develop new products, then that's less interesting and attractive for us.

What the customers think about them also makes a difference. 

Is there a way to find that out? Do you just actually try to have conversations with some of the customers? 

We just try to have conversations with some of the customers loosely without divulging confidentiality and things like that. It’s just asking around and poke around. Sometimes it's supplier peers, sometimes it's customers, sometimes it's the consumers. 

Just how does everybody feel about the products and customer service and are they really diving in and trying to go deeper with this supplier? Are they trying to pull content out in a way and move it to their competitors?

 You are involved in the industry and know the players there. What does that look like in terms of your sourcing process and how are you approaching the opportunities? 

So the last time it was just a phone call. I or somebody else on my team that will feed a deal, have a conversation with the executive leadership. And we might have a long-standing relationship already. 

Look in the handful of small industries we're in, even though we're a few billion dollars, the industries are relatively smaller and I wouldn't say niche, but they're smaller. 

Everybody knows each other. It's not hard to get around. It's not hard to know who all the players are and it's really easy. 

I've been in the business for 27 years and my average tenure on my top 20 executives that sit with me for 18 years. 

So we know all the players and ultimately a lot of the suppliers, the build components in these different industries. They know if they're ever thinking about selling that we're a great partner to sell to. 

We've done 70, and you're going to get a reputation good or bad, one way or the other when you do that many deals. And I feel like we've got a really great reputation and we treat the sellers really well. 

A lot of the sellers we've bought from over the years are still connected to the company in some way, shape, or form. 

Through either consulting agreements or they just stay close to the business and stick around and they want to know how things are going. And they'll recommend us to other people.

So a lot of long-term relationship building, but is there sort of like a prompt thing? 

Yeah. It's like that, it's really informal and hey, we're not going to sit down at the first meeting and lay it on you and make some big presentation.

That's I say, have you ever thought about selling your business, or if not, have you ever thought about it, or do you plan on selling it at some point in time? Just so that we know where they're at.

More often than not, if they say, Hey, we're not ready yet. They're going to make the phone call at some point in time and say, you know what, we planted that seed a while ago and have been thinking about it and it just feels like a good time.

I just like to sit down and explore what that looks like. And in other cases, we do get some calls from investment bankers, because we're in Europe now, we're an aftermarket, we're in commercial vehicles and the marine business. 

And there are some people that don't know us too well, so they will reach out through an investment banker, but they still know that we're a good acquirer of companies and we're a solid partner from a seller standpoint. 

But some deals happen that way too. They happen more, more formally through a process. 

So of the percentage of deals you've completed, how much are very linear versus did the introduction one to 10 years later?

Of the people we've approached directly, 80% of our deals have been not through the investment banking route through a formal type process. 

Of that 80% that we do, Hey, let's reach out and let's reach out to the owner and have a conversation, I'd say 75% of those deals happen relatively quickly. And the other 25% happened at a later date. 

What does your time look like in terms of the percentage of time you're spending on the M&A activity versus. Did you get to deal with investor relations and that internal operation? 

Well as a CEO or a leader for any position, you just have to be really good at time management. How you spend your time and how much time I tend to move probably more quickly and not spend that a lot of time analyzing and pondering.

And I've thought about it long enough, you approach somebody, hear their story, and make sure it confirms everything we were thinking. We generally move pretty quickly. 

I know some people, you can pencil with deals to death, and it can take a long time to get a deal done and take an exceptional amount of time.

And that would take a lot of time away from the other things that are important that I do, or that other leaders in the company do. So time management is really important. 

And if you'd manage your time while you can make time to do this kind of thing. But it takes a lot of practice and intentionality to  get efficient. So just a lot of practice. 

Kison Patel: And well, it's interesting. I have hope there is the study one day of assessment on CEOs and their competency around M&A because they feel like it varies dramatically from company to company. 

And you're on the other end where you're very hands-on and know your stuff. 

I want to talk to you about value creation. What are you doing to create value in these companies? 

The great thing in my opinion about where we're at today is like I said, we're almost at 3 billion. We got substantial resources in all areas. 

So the average business that we're looking at is 30 to $75 million, somewhere in there. It's kind of a broad range, but the deal size keeps changing as we get bigger. 

We're not looking at too many $5 million deals anymore unless it's IP-related and we get some kind of cool product or patent or something like that. And it's more a paper-related transaction than a business transaction.

So we're looking at bigger deals and they keep growing. And whether it's a $30 million deal or a hundred million dollar deal, their core raw material is steel or aluminum or foam or fabric or whatever the raw material is that they use. 

We use a lot more of that and we're able to go in and immediately create synergies on raw materials that create a better ROI. And it creates a quicker payback and returns on buying a business depending on where they're at and their sophistication in the sourcing world. 

Some sources, okay, a company that's 50 million and others are not very good at all. They got in the business because they developed really good products or they had really good sales, or they had some really good customer relationships.

But sourcing is really the key when it comes to returning because if we can buy 10% better, it makes the deal pencil a lot easier.  

And because there's more room for error as we operate the business. And if we bought something where we really couldn't move the needle on raw materials at all. 

We look at what innovation we can bring to the table. Typically, when we approach a company, we've already got some plans for their products. 

And whether it’s using our broader distribution network of customers. And we've got these relationships maybe that this doesn't have and we can plug their products immediately into our revenue chain with our customers. To me, it's things like that. 

And then ultimately, how can we grow the business? Where can we grow the business? We've got all these different areas that we can take somebody that usually these companies that we buy are singular market focus. 

It's a component for a train or a bus or an RV or a boat. And when we can take that and move it across multiple industries or even in the case of Europe, we move a lot of products back to the US that have really interesting designs that the US, they buy a lot of our European products. 

They wouldn't have that opportunity in Europe for example, if we hadn't partnered up, bought the company, and used our distribution network back here to move products from Europe to the US. 

It's a lot like, the public company that bought us in the ‘90s did for us, we would have moved as a family company, the very slow rate to grow our VEBAs. 

But when the public company bought us, they turned around right away and said, Hey, look, we want to give you 20 million dollars a year.

I know my dad, when he was running the business, he might've been willing to spend a million dollars a year and that was a stretch. 

So maybe we could get a new plan for a year, but the public company was letting me put up for a year as quickly as we wanted to grow. 

And so we would add that same value back to some of these small family-owned businesses that we’re buying that were risk-averse and conservative with how they spend their capital. 

And we have bigger visions and we see bigger potential because we know where they can grow or we can help them grow faster. And like you said, expedite some of that growth through just quicker capital infusion. 

How do they make you CEO? This normally doesn't happen or you're part of the target acquisition and you ended up becoming CEO of the whole entity. 

I don't think it was planned. It was one of those things that I was the third generation and when the public company bought us, I know my dad told them that, Hey, I've got my son and he's only a few years out of college, but he's doing good. 

And he'll take the business over someday. And I'm sure the public company guys were saying. Yeah, sure. That sounds good but we'll see. So it just worked out like we got lucky, we're blessed. 

I want to talk to you about leadership and culture because I think there's another element of value creation. How do you approach when you acquire a company because there's always a thing where every company has their own unique culture, then ultimately you need to create some kind of uniformity around it?

It's actually the most exciting thing we work on and I didn't mention it, but it's one of the soft ROI, the soft part of ROI that nobody talks a whole lot about, because there's no way to really put an ROI around it. 

But we're one of the few companies out there that spend a lot of time around culture and leadership development.

You mentioned an M&A team. I don't have much there, but on the culture and leadership side, we've got probably 24 individuals right now in the company that do culture and leadership development and that's all they do.

And a lot of that is focused around our newly acquired companies. So typically it was we're trying to work all the time on improving our culture and moving the leadership needle for each and every leader in the company through these teams. 

Often we have to kind of move some of them over to the acquisitions and say, look, the company knows where we're at. And every business unit in our company has heard my message, heard our leadership team's message and that flows through the organization. 

But when we get a new company coming into the family through acquisition, they've never heard the message or they might've heard it from the outside, but they don't really understand that clearly.

So we have to go in, make sure right away that they understand that there is no compromise on the values. So that is a wholesale change. We make real quick love that you might've had values before. 

Most small companies we buy don't have them. And if they do, they're just hanging on the wall. They don't talk about them on a regular basis.

But, one of the things we do right away is we throw out our values and talk about how we hold people accountable and align people to the values so that the culture is consistent. 

If we don't hold people accountable, the values, those are the companies that people say, Hey, they put the values on the wall, but they don't live up to them because everybody does something different than nobody's held accountable. 

And then you don't have a culture or you have a bad culture. 

So I see culture and leadership development is probably the most significant piece of widening your mode or developing a competitive advantage because ultimately when your culture is great, more and more people stay over the long term.

And when more and more people stay over the long term, you just get more momentum in the business you just do. 

Safety, efficiency, quality innovation, they all get better when more and more people are coming into the business with their hands in the air saying, Hey, look, I'm coming to Lippert today and we're going to make stuff happen.

And I'm going to put all my energy and passion into the business, and we're going to do great things as opposed to a culture that's blah, or I'm open into work, or they're not calling in and saying, I'm not coming anymore. They're just not showing up. 

The difference between those two businesses is drastic when it comes to efficiency and safety and quality and innovation.

And to me, that's where we spend a lot of our time because that's developing a huge competition. 

It’s giving us competitive advantages that I know our competitors don't have because they're dealing with turnover and training and all this stuff that higher levels of attrition. So we just happen to spend a lot of our time here. 

We've been on the journey for 10 years. We do a lot of things at other companies, and a lot of that's just making sure people know that we truly care about them.

We listen and we don't spend our time just talking and barking orders and things like that. We want to know what we can do to make it better because they're here 40, 50 hours a week. 

And we have the ability to impact their lives in a pretty significant way. And if we do that in a positive way, they're probably going to bring more energy to the business.

They bring more energy into the business that probably gives us a competitive advantage over our competitors. 

So it helps the business and it helps our team members. And ultimately we summon that energy and hours for community service and things like that, that we've got pretty substantial initiatives on. 

I'm curious to take that as a company and you've acquired the business. And now how does that company transform? What does that journey look like from having those values in the wall written somewhere to actually make an impact and make a difference in their company?

The stat I like to use with team members, especially in acquired businesses all the time, is that 88% of the people in the country that work feel like they work for a company that doesn't care about them.

So what's that say about culture? It says that 88% of our cultures aren't that great in the business world. And we were one of those companies prior to 2013. We didn't have any values at all. 

We didn't have them on the wall, we didn't follow them. We didn't have them. We ran hard. We worked our people hard and when they couldn't keep up, we moved them out of the way and found somebody else, and left people in the dust. 

We started the values and whether you have them on the wall or not just make sure people know that they mean something, we're going to make a big effort to make sure that people are held accountable. 

And if they're not, we're going to coach them up. And if they can't be coached up, we're going to either transition them to a role where maybe they're not in leadership or we're going to transition them out of the business.

And so that people see that, Hey, look, if you don't follow the values or you don't align up to the values, then you're probably not gonna be able to work here over the long term. 

Likewise, on leadership development, we have to pour back into leaders and teach them what leadership is because most people, got to a leadership position not because they really follow the values and they're good performers, but because they were just there every day and especially in the manufacturing world. 

And if you think of the frontline supervisors, they're there every day, they work hard, but it doesn't mean that they lead well, but we promoted them anyway and that's how most companies do it. 

You have to make sure that the values are alive and that they're followed and you just start there. And then just, I told my workforce in 2013, I said, Hey, look, I know we throw all these values out here and we haven't always done this. 

We haven't lived up to these, but watch us from this day forward. And as long as we're doing what we say, we're going to do, and we follow the values and we're trying hard to hold people accountable, then just come along with us. And if we don't, then you're free to go. 

Trust us and trust that we want to make an honest, solid effort. And it's a long journey and the journey never ends.

So we still have steps to take. Some of the steps that we're taking today look vastly different than the steps somebody might be taking a year or two. 

Even though you're looking for good leadership to begin with, it's almost like there's an element of coachability or continuous learning that needs to be in there as well. 

One of our first steps was three years of listening sessions. So again, with acquired companies and means it spits it right into M&A, or with our existing businesses that we're slowly transforming the culture with.

We did three years of listening sessions and just said, Hey, look, I'm coming through the plants. I haven't been through the plants in a long time. I used to weld and that's where I started. So I'm not unfamiliar with the manufacturing areas. 

It started up, a lot of our welding plants work side-by-side with a lot of people, but as we grew, I just grew out of the facilities and didn't go back a whole lot.

But I made it an effort for me to go back so I could hear firsthand what people thought the problems were. And they were really simple problems to solve. 

And some of them cost money and some of them didn't, some of them were just, Hey, we need to make some leadership changes. 

Others were, Hey, look, we've grown 10 X over the last 10 years. And our bathrooms are the same size and they're dirty. And our break rooms are the same size and they're dirty. And the plants aren’t organized and vintage. 

You just put some paint on the walls. Could you buy some more microwaves for lunch? Could you buy some benches to sit on for lunch? Just easy stuff, but we weren't listening. We were just too busy trying to get the next hundred million in revenues. 

So as we changed those things and they saw, we were listening, they came around and they went from leaving all the time to saying, I'm going to stay here. 

Then we started investing in community-service-type projects, and we started hiring leadership coaches and personal development coaches that cater to our frontline team members who, by the way, you got 1500 of those. Leading 10,000 of those people in our company. 

So if we're not taking care of that first-level supervisor, 10,000 people aren't getting cared for. So we really got these leadership coaches plugged into our frontline leaders just to teach them what leadership was. 

Teach them what our values are and engage them on a higher level so that they're not just showing up and we're giving them a production schedule and they get it done and go home. How they lead during the day is their business.  

Let's talk about key lessons you've learned over doing 70 acquisitions. 

We stay away from garage sales. We tend to focus on the growth path, we tend to focus on innovation, we tend to focus on good leaders. 

We've acquired a lot of companies with high capacity leaders in place. Capable of doing much more than what they were doing. 

We take some of those leaders and we give them more responsibility because they just were high capacity. And they were only doing what they were doing because that's what they were in charge of and that's what their company wants. 

I want to hear about the deals that you shouldn’t have done. 

The only deals that were really tough for us with the ones we did. '07, '08. But even today, they're great businesses.

We bought a furniture company for the RV business in July of 2008. We had a financial crisis obviously, it was a few months later. Business sank, it was the highest, it was a $40 million acquisition. 

It was the highest-cost acquisition we'd ever made. And we're sitting here, what did we just do? But that business today organically grew to 300 million.

Our president of North America came from that business. So I look back at it and say, yeah, it's as horrible as '08, the end of '08 and '09, where for that business, I still would have pressed the go button on that 10 times out of 10. 

We've made all the businesses we bought work. Again, a couple of garage sales we bought, really cheap, didn't work out too well for us. Some of those, you pitch a few million dollars. It's not the end of the world. 

We tried to innovate in some spaces and try to buy some companies and make some things work on some ideas. They didn't work too well, but we're not risking 10, 20, $40 million at a time or risking a couple here in a couple of there.

There are few of those, but when you look at 70, most people would say, Hey, if you had a 70% ROI that was meaningful, now it'd be a good rate of success. But I think we bat in the nineties all day long.  

Is it easier to do these deals as a public company? If I get excited that you're calling them because they know you're listed. 

People get more excited inside our industries because they've heard good things about us. They know we're a good acquirer. We know that we treat the sellers really well. 

They know generally where they're coming to work for a company that’s got a lot of potential and had a really significant growth rate over the years.

And it is a good company to invest in and that the people are pretty solid and strong and that a lot of people like to stay here over the long term because of the way they get treated. 

That’s always compelling for sellers and then team members that might not be owners, but might know that they're coming here.

It certainly gives us more hunger to do deals with because there's more of a risk appetite. But other than that. 

If the CEO is doing their first acquisition, what advice do you have for them?

Start small stick with again, some people have heavy risk talent, and they're willing to get into something that they know not a lot about. That's not me. 

I got to feel good about the business and the products and the growth potential. And again, today, for me, it's how does it plug into our business and get better?

If I can see that, then a lot of people that might be starting out doing their first one, that might be there are zero revenues today. And that's their first bucket of revenues that they've got to work off. 

And if they're doing that, I just say, “Hey, look, it has to be solid leadership. You have to have no weird gut feel, your gut feel about the leader or leaders of the business has to be rock solid and they have to be great people.” 

And I pick people that are on very solid, moral footing and not people that are running fast and hard and things like that. And for me, if they've got faith and they've got a faith background, that means something to me.

Everybody looks at things a little bit differently, but the people that you acquire will make or break the business. 

You've got to do a lot of good due diligence there and spend a lot of time, not so much talking, but listening to the people that are selling the business to understand who's coming with the business at all levels. 

Not just that, not just the top level. Because you make the mistake there, then you don't know what and who is running the business. 

Have you had that where the culture was bad or you found out later the culture was bad? 

Oh yeah. Nobody intends on having a bad culture. They just run the business too much off the numbers and it drives a poor culture because it's not compelling and inspiring to anybody. 

If people are icing and it's about the numbers. And if they're not led well, whether it's at the president CEO level or the executive level or whether it's a manufacturing level, if people aren't led well, they're going to leave. 

The leadership isn't inspiring, they're eventually going to leave. To me, those are easy problems to fix. Just teaching people about, again, that's that 88% number, 88% of the cultures are not great out there in business. 

So you're likely going to buy cultures and leadership models that aren't compelling. And it's just turning on the light bulb. And real quick people will turn and pivot because it feels better when you start inspiring people through culture and leadership development. 

That just fills you up a little bit more than just what the numbers do all the time. When you can transform some people's lives because now you're not making their lives miserable and the leadership sees that. 

Everybody kind of jumps in and the culture needle, it moves pretty quick. It doesn't take a long time to move culture if you do the right things. 

So you can take a bad culture and move it to a good culture in a pretty short period of time. If you put the values there and make sure the leaders are right and that they’ve bought in.

And that you’re holding people accountable to the values and putting some extra resources there around leadership development and personal development and community service, work that into the business. 

I still don't meet a lot of businesses. They have leadership development resources, people that are dedicated to that.

They say, oh, HR does that or I do a little bit of that in my job. And I mentor and I coach well, that's great. But someone needs to, that needs to be somebody's job. 

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

Some of the money being thrown around, especially in the private equity world, the way that's so much the way that money is thrown away because the multiples are much higher there. 

But just the model of stripping things down and stripping things away and the only thing that matters are the numbers. And that's just it, I've worked my way out of that mold for the last 10 years and focused on building a strong culture. 

Because if we build a strong culture, we're going to build strong people that want to commit to the business and bring energy and passion in the business and we do that, the business model generally wins as long as we're evaluating people based on performance as well. 

But when you strip everything back to the numbers, it's just not sustainable long-term. And you know how that model works. They're looking for a quick, let's turn it in for 3, 4, 5, 6, 7 years and sell it. And that's the goal. 

It's probably not too crazy or off the wall, but that's the one thing that I think is kind of nuts. 

You look very healthy and happy. So I'm wondering if that's attributed to that approach. 

Yeah. I think so. The one thing that keeps me coming back to the business every day after 27 years, the life transformation that we have through culture, there's a lot of people that come into this business.

I think we've hired 1500 people this year already. And a lot of people are coming from bad business culture models where they've been beaten up and yelled at and screamed at. 

And they come here and it's just, they can breathe, they can think, others are encouraged and inspired to do well. And ultimately that's what they ended up doing.

They contribute their jobs and then the leadership lessons they learn about what leadership and values look like. They take it home to their families and it helps transform their families, and other people they touch outside the four walls of our business. 

And to me, that's what's fun about businesses hitting the records and all the goals that we've set for ourselves as a business, but also the life transformation and impact we get right along with our people. 

We're fortunate enough to have 14,000 team members that have, another 20, some thousand or 30, some thousand families attached to them. And we've got the privilege to care for all those people. And we can make a difference in the world. 

Ending Credits

Thank you for taking the time to explore the world of M&A with our podcast. Please subscribe for more content and 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 my email. 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.


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