Leading M&A with Integration

Javid Moosaji

Stacy Hendricks

Carlos Cesta

This interview is a rewind from our M&A virtual summit, which was held in June. The topic of discussion is leading M&A with integration, featuring our guest speakers Carlos Cesta, Corporate Development/M&A at Presidio and Javid Moosaji, global head of partner channels, platform solutions and transformation at Travelex, hosted by Stacy Hendricks, senior director at Alvarez and Marsal. In this webinar, you will hear a breakdown of the integration process and learn what to look for in an integration leader. Topics discussed range from when to go to market post close to how to hit synergy numbers.

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

Leading M&A with Integration

15 Jun
Javid Moosaji
Stacy Hendricks
Carlos Cesta
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Leading M&A with Integration

Leading M&A with Integration

Integration team should start very early

The Corporate Development team should bring the Integration team during the targeting stage. The Integration team should be able to understand and include integration criteria and components into the targeting and profiling of a particular client that you want to acquire. As you bring those integration criteria, it allows for a better valuation down the line. It also prevents more risks and pitfalls.

Integration lead 

An integration lead should be someone who has a lot of the background into the business and understands how things work. I can’t just be a project manager. It has to be a COO or a GM type of person. It has to be someone who has the right credibility, and they should be able to influence some of the thinking around how you bring two companies together.

Go-to-market planning 

You have to start the Go-to-market planning at the very beginning. You have to start with the customer and the products and the rest of your organization capabilities should align to that. 

The whole reason for acquiring a company is for growth. And if you don’t start by identifying your customers, then you won’t be able to know the systems required, the skill sets and processes that’s necessary. You will lose a lot of customers and subsequently value.

Finish line

Integration can last for months or even years. And it goes back to the original KPIs that you were settling at the beginning. Integration is over when you've hit your integration milestones, and you have transitioned into that “business as usual” stage. 

special guests

Javid Moosaji
M&A Sales Integration Strategy at PayPal
Stacy Hendricks
Senior Director at Alvarez & Marsal
Carlos Cesta
Vice President Corporate Development at Presidio

special guests

Javid Moosaji
M&A Sales Integration Strategy at PayPal
Stacy Hendricks
Senior Director at Alvarez & Marsal
Carlos Cesta
Vice President Corporate Development at Presidio

Hosted by

Kison Patel

Episode Transcript


Julia Rollins: My name is Julia Rollins and I'm a Customer Success Manager at DealRoom and I'm here to introduce our next session today, which is leading M&A with integration. Our speakers are Stacy Hendricks, Senior Director at Alvarez & Marsal, Carlos Cesta, Vice President, Corporate Development at Presidio, and Javid Moosaji Global Head of Partner Channels, Partner Solutions, and Platform Transformation at Travelex.

Stacy Hendricks: I'm a Senior Director at Alvarez and Marsal, and I'm on the M&A leadership team for the corporate performance improvement practice there.

Prior to A&M, I was the Head of M&A Integration at McAfee. And then prior to that, led acquisitions and divestitures at Hewlett Packard and Samsung. 

I've also been on the other side of the coin and then a co-founder of a clean energy company, and also advise other startups on the sale and funding process.

Also with us is Javid Moosaji, he's the global head of partner channels at Travelex. He's experienced in leading large-scale programs that deliver strategic partnerships, digital experience, and M&A integrations. 

He has more than 15 years of experience in the FinTech industry and has played various roles involving product go-to-market commercial development, strategic planning, and M&A integration. 

For Carlos Cesta, as VP of Corporate Development at Presidio. Carlos dedicates his time to defining, executing, and communicating the company's growth plan. 

He's an investment banking and private equity trained corporate development executive with more than 20 years of experience in strategic initiatives for notable companies, such as Verizon, Solomon Smith Barney, Citigroup, Dentsu Aegis, and CIBC Oppenheimer. 

He's led a variety of transactions that included principal and advisory-led engagements, venture capital, private equity investments, joint ventures, and commercial arrangements. 

So it's my great pleasure to be able to facilitate the discussion here today. I'm excited to chat with you guys about the topic of meeting M&A with integration.

Lots of us have been on both sides of the deal. We played roles on both the execution side and the integration side and know that poor integration is one of the leading causes for deal failure. 

So what exactly does leading M&A with integration mean to you?

Carlos Cesta: Thanks for having me. Stacey and Kison. I'm more on the deal side, right? For me, it means when you look at a deal and competitive setup and you were preparing your bid you gotta look at certain things that are intimately linked to the deal. 

For me, it's a spiral project, at a time that you revisit one topic you affect the other. You think about the economic terms of your deal. They're structuring the deal as an earnout, but also where at that point we are conceptualizing it. 

You also think about where in the entity the acquirer that has been a report to, how are we going to integrate how fast or how slow? And are they incentivized?

Everytime that you change one of those variables, it affects the other. Let's say it's a competitive bid situation and you decided to put an earnout. Okay, there are consequences and it's going to change how you're going to integrate. 

For me, it means bringing the lead integrator at that point of the deal, into the conversation with the deal sponsor.

There's a second point, more tactically, means developing an integration strategy or plan with a seller, together with the seller. 

Discussing with them the points that many times about integration that will not end up on a merger agreement or anywhere else in the deal. At least you have some sort of like, letter of intent of how you plan to integrate.

Javid Moosaji: For me, integration is two things. First, the medium integration, you have to make sure that at the core of all of this discussion, the strategic intent and the goal is upfront and it's very clear to both parties. 

We also need to make sure that. The customers and the products are the forefront of anything that we're doing, right?

So integration has to have those components and those guiding points really, really at the forefront of everything that we're doing. And that's what then drives the integration further down the road. 

So it's very important that we have customers at the forefront and what products, and it will vary by the nature of the products or the partners and the companies you're acquiring.

Certain deals weren't more complex integration, certain deals, they're just bolting something on, right? So integration can vary and will have a different meaning. 

And we need to bring people up into the integration, different stages depending on the deal type.

Stacy Hendricks: You both mentioned starting integration early. I’d like to dig a little bit more into that because especially, there's a little bit of a push, pull sometimes between the deal teams and the integration teams as to when the integration teams come in. 

In your estimation, when does integration actually begin? When should the team come in?

Javid Moosaji:I think today there's a trend where corporate development and a lot of integration guys tend to be formed as part of the same team, right? 

So there's a tendency towards that which is a great thing. Having said that, there's still a little bit of a  blurred line there. And my view is, integration should start at the targeting stage, right? 

And I know a lot of people say, Hey, it should go towards, start towards due diligence. But there is an element where it should start at the targeting stage. 

Now, working closely with the corporate development guys, subject to having the right integration lead and the right skill set, they should come in a little bit earlier.

Because they should understand and include some of the integration criteria and components into the targeting criteria and profiling of a particular client that you want to target or acquire. 

And that as you bring those criteria, integration criteria into the mix. It allows for a better, I would say valuation down the line, right? It then allows you to prevent any risks. It allows you to not fall into some of the pitfalls, right, that typically we've thought we've seen, right? 

And you don't want to end up in a situation where you've closed the deal and certainly, as you're going through the integration, you know, the momentum you're opening up and you're finding a lot of things there, right?

And if you've got an experience integration lead, they can come in a lot earlier in the process and help. They can help with a bit of the experience, introducing certain criteria into the profiling of targets.  

Carlos Cesta: The best experience I've ever had with integration, integration leads was I brought the person to the pipeline weekly meetings. That person will know what's in the pipeline and how we start thinking about it.

And also getting a little bit more tactical when you start the deal. Integration for me, it’ll be another diligence or workstream. In addition to HR, IT, and as you start doing discovery,   those discoveries start feeding into what the integration plan is gonna look like.

And that person's, deliver what the end of the diligence is. Not a diligence report, but the plan itself. So it is very early in the process, but it's maybe in the midst of that one person that is your right hand in the integration.

What's the ideal profile for an integration lead and is it just that one person, or do you bring in two or three people on an integration team early?

Carlos Cesta:  Having had the experience in large companies as big as Verizon , and then middle market. What is really interesting is that in the middle market, you have the ability to be a little bit more creative and it needs someone that is almost like a COO type level.

And it's funny, I had so many discussions. I can't prevent bringing some stories on this where I have to hire someone, and then, regular vision was, Oh, which is the project manager, right? And no, no, no, it's not a project manager. 

The project manager is a big component of what that person's going to do, but that person has to have a high sense of commercial operations, economics of the business.

Otherwise, if it's just a project manager, we'll be consulting with so many people in the process. And it's never going to be a proactive thing to see the issues that are going to come up down the line, anticipate them, address them. 

Understand the ramifications of those, that spiral that I was talking about, that person is an integral part of it."Oh, this is not a fact that, Oh God, it's gonna affect that." Communicate with people and anticipate. 

So it's a very hard profile to get, working in international companies. And then, it's hard, you have one person that, what is the background of that person? 

A COO is the closest thing I can think of, but it has to be someone that has a lot of the background into the business and understands how things work and also navigate the politics of the infrastructure, right? 

Because, many times there is bad news that we have to deliver to someone, but do you anticipate how you're going to deliver and to whom? And who's going to be able to break the walls and clear the way for you to resolve that problem? 

Javid Moosaji: That makes perfect sense. I think Carlos mentioned  the CEO type person. I echo that and I think there should also be, there should be GMs, right? 

They should have the right gravitas, the right credibility, and they should be able to influence, right? Some of the thinking around is how do you bring two companies together? If you think about the integration you're essentially setting up a business. 

You’re bringing two worlds and you're combining it and hopefully creating a new entity to deliver growth. And so that requires a certain type of a profile, a certain type of role.

And certainly not somebody who's just a program or a project manager that definitely underpins a lot of the activities, but that's more around, how do you go about executing and governance, right? 

But you certainly need people who understand, technology, who understand, can they grasp, what is the performing business? Like, what would I need to do to achieve a performing business? 

How do I set up a target operating model? How to understand the relationships between suppliers and customers? It's more of a rounded business person that's required and certainly the need to be able to handle senior leaders and influence them.

Quite often you'll have very strong characters with egos and personalities that you need to manage, which is really important. So certainly, CEO type of a GM that has that experience to be able to navigate organizations. 

But having said that a little bit I know, Stacy you mentioned that it is just the integration lead, right? But I think what's important is also to bring some of the product and some of the salespeople a little bit earlier into the integration process. 

Because they may have some insights just by playing in the market space in the landscape. They’re really interacting with customers, they're interacting with partners. 

So they may have some insight, which is quite valuable. We need to bring them, early in the process but I'm mindful that with any deal, there is cost and resources associated with managing a deal pipeline and along with confidentiality. 

So you can't bring everybody on board, but I think it's selecting the right few people, which can make that difference earlier in the targeting and then due diligence phase.

Stacy Hendricks: So I have a couple of follow on questions to that. Sometimes in a deal when you were talking about an integration lead, being a GM level person, as being on the CorpDev team myself, there's a title on that slide that says integration lead.

And sometimes there are two people on that. One's on the business side and one's on the CorpDev side. 

What’s the delineation there? How does that work?  Is it a double duty? Who's leading that deal? When to bring in the sales teams?

Carlos Cesta: I don't know about titles though, but ideally would have a lead integrator that has a portfolio of integrations that he or she is a manager, right?

Because there are long-term processes and that person is both managing that portfolio of integrations, but also someone that has done a lot of deals and understands the pitfalls.

That’s a sort of lead integrator. Someone in the business, yeah,this is also very helpful. If you can double that, that'd be great because you combine the best of both worlds. 

Someone that is in the business and knows, and you cannot force,, Microsoft office on this company, this acquisition, because they're not going to take it, or he's going to call it a major disruption of the business. 

With the experience of someone that has done a lot of deals and said, it's okay because this is how we solved this in the past. And there's a solution that is already, sort of vetted by everybody.  

There are confidentiality issues about not bringing too many people on too early. When is the right time to involve the sales team in the process? 

Javid Moosaji: Yes. I think it's important to distinguish where you are in the process. Bringing on the entire sales team, that's part of  integration.

But if you're not at that stage there, what I was referring to is at least bringing in the head of sales or the head of a product. 

Obviously, they're operating within confidentiality because earlier in the targeting phase and in due diligence you can't have the entire team there, but they'll bring insights to you. So we need to just understand where we are in the process of the deal. 

So if you're in targeting and due diligence, you bring limited heads of sales and heads of products into the mix. So they can provide some insights into that process beyond when you're getting into due diligence.

And then, beyond when you’ve closed the deal and you've gone into the integration phase, then you tend to bring them a lot more into the mix.

Is it more around post-closure, or is it prior to the closure that you were referring to?

Stacy Hendricks: I think I was asking about both. I think that the go-to-market pieces, people get really involved in the logistics of just getting to close. 

And so the go-to-market piece sometimes gets pushed after close. Sometimes maybe, it gets pushed too far down the line, or it's not even really part of the formal integration process.

Talk about the criticality of the go-to-market piece of this when you bring the team in, and when you start on that to just, the criticality overall of that piece of the integration plan. 

Javid Moosaji: Go-to-marke, it's a strange one because typically if you think about the corporate development guys and the ones that I've interacted with, they touch on go-to-market as their profiling and targeting customers.

They're looking at revenue, they're looking at customer cohorts, they're looking at a number of things, the products, channels. 

So they're looking at a number of areas and it's quite often, that kind of once you've closed the deal that kind of dies down a little bit, that momentum dies down. So coming back to the criticality of go-to-market integration, it’s the first thing you should be doing, right? 

Because if you think about why do we go and acquire a company it's either because, we definitely want to get some kind of growth there, right, some kind of inorganic growth. 

You’re going to do that by combining customers, by combining products, or by combining a certain skill set but invariably.

Depending on the deal, the nature of the deal. But in a lot of cases where integrations or when complex integrations before, it means you're combining customer basis and products, and therefore you need to start with that.

If you don't start with what type of customer am I serving? What's my customer base? You can't then have the right discussions around or what systems are required, what people and skill sets, what processes need to be combined? 

You often go into the operational elements, the mid and back-office integration topics around systems platforms without really truly understanding which customer base is this serving.

So in my mind, you should always start with go-to-market planning because that's part of your target operating model and your set-up.

You start with the customer, you start with the products and then the rest of your organization’s capabilities should align to that. And that's what you'd also do in its strategy. 

It’s fundamentally important to have go-to-market plans around integration at the forefront of any decision-making. If you truly want them to achieve customer success or customer plan or customer value rate, right, and that's my genuine opinion. 

That’s very much relevant where complex integration's required. If you're buying a company that you just would need to bolt on because it's purely just a certain skill set then you can have a fairly loose integration over there. 

You can almost leave their sales teams and their go-to-market teams pretty much untouched because you want them to flourish in their own world right, with a very loose integration. 

Go-to-market planning is really important. What are the consequences of not doing that, right? That’s a number of things.I've seen this around, you can see customer service levels dropping. 

You can see customer attrition,, they're defecting, you can see a bit of blurred roles and responsibilities within teams, right? So you imagine you have two sales teams coming together and then two related operation teams coming together. 

If you don't integrate that,, the products, the offering, or at least come to an agreement of how you're doing that, or when are you going to do it? You get confusion around roles and responsibilities, right?

Your customers get confused around what you are offering them, right? Which brand are you? How is it? How does it work, right? 

You can create a lot and destroy a lot of value, right, and confuse I think normally internal stakeholders, but also confuse your partners if you don't start to think about the go-to-market earlier in the process.

It’s a very important element because it also touches on partnerships. 

Carlos Cesta: That's a smart thing to do I think. Bringing the go-to-market a little beginning of the process, because a lot of percentages of the deals that I've done and talking about synergies and how one plus Y equals five, whatever. 

It starts with that investment thesis that, there's more here than they can sell together, right? And if you're doing diligence, you can test that upfront, and their answer is no, you saved money, but not continued diligence. 

It's a smart thing to do because you stopped spending money. I like a quick no instead of the second-best answer we can do for a deal.

Javid Moosaji: I think that that's very true. It’s quite important, but the reality is there's this complexity in how you measure it. 

There's a lot of complexity in combining a sales team, the sheer fact of putting two sales compensation plans together is a nightmare. And it's very disruptive. So people tend to shy away from it. 

They tend to shy away from complex measurement things. I'd say, we'll leave that for further down the line. And then tend to focus on more tangible things. Whether it's combining offices, combining a couple of centers of excellence, and shifting people around.

So those are a little bit more tangible and a lot easier to measure from a KPI standpoint. Whereas, product sales are a little bit more complex to measure so they tend to leave that, unfortunately, a little bit to further down the line. 

And my view is that you should bring those difficult questions upfront and force yourselves as a combined team to answer them. And be upfront and honest about the value creation, some of the synergies you're going to get. 

Revenue synergies are always a little bit harder to do than cost synergies. And I think we all know that. So that's one of the reasons where we tend to kind of push it further down the line. 

Let’s talk about some tips and tricks in the integration process that helps you hit synergy numbers, whether it's revenue, synergies, or cost synergies? 

Carlos Cesta: If I had known the follow-up, I would probably have not interrupted, but it was all in agreement with it, but that's what I've been trying to do in the more of smaller deals and upfront. 

It also has a lot of correlation with what Kison called the Agile M&A because all we're going to do is parallel tracking things that we usually sequence.

So one of the tricks is just to test the synergies early on, even if you can do a week before between signing an LOI and starting diligence. 

Just spending time with management and doing that deep dive into the value drivers, if those make sense, I think it saves a lot of money because you will probably in many cases be wrong about what the thesis was. 

I think that's one of them and the other trick I would say to capture is just referring back to what I was saying is the designing of the integration plan together with the seller. 

It's not the only exercise of, making them part of it and making sure that there are no surprises later, but also you're gonna likely be discussing very touchy things into that process.

That's when you test a little bit more to the chemistry between let's say the seller or the CEO of the company and your principal sponsor inside your business. 

Because I went to that point,  I backed that everything was being rolled as an "Oh, this is great, this is great. We're gonna buy your company." Everybody's happy and avoids the more touchy issues. 

And in that process, those issues are discussed. And two people are going to be bridge builders or it's their way or the highway. And I've seen deals that break at that point because of disagreements on the issue becoming a little bit more ugly.

I'd love to hear your take on the synergy tips and tricks and then how do you handle disagreements in this process, particularly when the disagreements are with C-suite executives

Javid Moosaji: Particularly around the cost and the revenue synergies. Some are a little bit harder to achieve than others. And some are harder to measure than others. 

If I have to give one tip, it's just identifying those synergies very early in the process and making sure that the integration team as a whole is accountable for that, along with the business. 

So you have to make sure that, it's not just the responsibility of an integration lead to go and measure and identify synergies, it has to be the wider business. 

And if you can, somehow from an organization standpoint, if you can somehow include some of those integration KPIs into the overall business scorecard, we should then trickle down into employees. 

It's hard to do and see it's easier said than done, but if you can do that, you're ensuring that the broader organization and the employees and people across the organization are also brought in some of those synergies and contribute in some way, shape or form.

So you’re starting to actually force integration through measurements. And then making sure that everyone is accountable. So everyone has skin in the game. if you can manage to do that,  that's kind of a good thing.

How do you bridge disagreements during this process? Especially if it's coming from C-suite executives, how do you address that? 

Javid Moosaji: For me, the one thing that's important is that it's going back to the original objective of why the acquisitions are too hard. Why did the CEO of the acquired company decide to sell? Or why did they do that? 

It's going back and reminding the C-suite, why are we doing this? Quite often, you've closed the deal and you're getting into discussions which sometimes could slip. 

And then you're dealing with your egos, you're dealing with passionate people and large personalities, but we easily forget why was this done in the first place? 

So it's coming back to why didn't you want to sell this in the first place. It sounds a bit silly,  but there is a little bit of human stuff in there. 

You need to be able to kind of bring the C-suite back to the original intent of why the acquisition took place, what were the original objectives? 

Then that helps them, bridge that gap and say, okay, how do we want to achieve this? But having said that, we should never really shy away from disagreement. 

As long as it's for the common good, then it helps get the common goal.  It's important to listen to parties that are giving a slightly different opinion. And they may have a valid reason, particularly from the acquired and target companies. 

So it's important to listen to them at the same time, but also bring it back to the original objective of the acquisition and the strategic goal. 

What do you think are some of the pitfalls particularly in cross border deals which can get very complex very quickly. What are those and how to mitigate them? 

Carlos Cesta: You need someone, we need boots on the ground first and foremost. 

So reverting back to the one we're talking about that structure, we would have a lead integrator, whatever they have part of the company or whatever your M&A lead is? 

You need someone in the business, in the country, or in the region to facilitate or to be part of the integration team as well. 

In terms of pitfalls, I think culturally it's a very different approach.

And the way I think a project manager changes things in the Northern hemisphere is a little bit different. If you're too aggressive with them and chasing them for things they're not going to respond. 

They're going to do a loop around you. They want to feel part of things, right? Emotional intelligence plays a lot into this and that's the way business is done. 

So you need to make them feel they're part of the deal and bring them along.  It's not, flushing your writing in front of them that's going to get things done. I think that's one of the pitfalls.

Having someone in the region and also acting with a deep sense of empathy. All the things work there and in my experience apply to that as well. 

Javid Moosaji: From my experience, the number of challenges, with cross-border deals and the obvious one is things around legal and regulatory environments. 

When you go about combining teams or trying to achieve cost synergies, doing that in the Nordic countries versus in Europe doing it versus, Germany, Italy, France, and Spain is very different.

A good example is in France and the labor laws are quite favorable to employees. Rightfully or wrongly. 

And therefore trying to make redundancies takes a very long time. So that can impact your integration timelines.

Similarly, for some of the compliance and then regulation requirements. The challenges around there, the other one is very much not only a corporate culture, but it's also people culture. 

Sometimes, there are certain stabilities when people say one thing, they actually mean something else. It’s important to take those kinds of things into account, but also, customer and market behaviors change. 

I remember I did an acquisition where we're summarizing involve European markets and North America. We had massive check printing going on to service clients.

In most of the other markets, customers moved away from checks, and therefore we wanted to close down a whole operation involving checks because it wasn't a very productive thing. 

But it meant for some reason, keeping a very high, intense, costly check printing facility for North American customers. So they're actually the synergies. They vary because of markets and customer behaviors, preventing us from achieving certain sorts of synergies. 

So it can impact,, once you dive in and you open bonnets. The number of factors that can impact these when it comes to cross-border things. 

So outside of cross-border deals, do you all have other thoughts on other blind spots that people may need to keep an eye out for during whatever part of the integration process?

Carlos Cesta: Well, I was thinking about culture because one example came to my mind especially when we're doing acquisitions in the media space where innovation is very fast. 

You're acquiring companies that are, millennial gen Z. Well management is probably general gen X / Boomers. It can be a challenge. I haven't seen the deal. That's the thing that's done. This is another whole other discussion. 

I have never seen a deal be killed by different subcultures. We always think we can handle it, I've seen deals, not work because of culture synergies not getting there. 

There's a whole lot of people that I talked to, then they're trying to figure out how we put culture into the equation? How do we measure that? Don't have an answer for that. 

I'm happy to join discussions about my bad experiences with that, but I think culture I know it's overused but I just don't know how to put them in the equation yet. 

Stacy Hendricks: Certainly a critical piece. And I know that there's another session during the conference, just talking about culture.

So Javid, what about you? What are some other pitfalls that you think that people really need to look out for? 

Javid Moosaji: I've always been a little bit burned by the complexity of platforms and systems. So we kind of get a view of that during due diligence, but we don't really get a true picture. 

It’s a bit important to have people who understand the product, the market, and then what systems are required. 

Quite often, in my experience you've gone in and you look at systems, then from an integration standpoint, you are left with multiple legacy systems that you don't want to try and buy into one platform and that is never successful. 

It takes a long time and what happens is you end up transitioning that into business as usual, and then it loses momentum and you've kind of, writing it off.  

One thing is to truly understand how systems are supporting your customers and your products. And are there the right systems? Can you really migrate into that system or not?  

So that's one thing that I've always been a little bit burned. At least from an integration. And we know there's a lot of complexity there. 

There are a couple of questions about the technology and IT platforms. There's a philosophy with some companies that you should just continue to tack on systems, and let them run independently. And others really have it all or nothing, you're on our platform. We don't accept any other platforms. So can you comment on that a little bit on those different strategies? 

Javid Moosaji: I've experienced both. And the sad reality is, the people who are very, kind of military and dramatic about it suffered in the short term, but in the long run, they were better at it. 

Their downside about actually just tagging on multiple systems is you can't truly have a very good go-to-market strategy. You will always be faced with problems with certain customer sets and on one system versus the other. 

And therefore your go-to-market becomes a lot more complex. You can't have a really solid strategy around the go-to-market if you have to play with multiple systems. 

Particularly in this day and age where everything is moving towards digital, and it's moving so fast, you want to have data and used data in a very 360 degrees way where you're going to understand your consumer’s systems and platforms is critical. 

So you either move them onto one, but if you have them playing around on different systems, you're going to struggle with go-to-market strategies and a little bit to what I was saying earlier on.

If you don't have a solid go-to-market plan and the rest of your areas tend to fall apart.  So I would not encourage people to just put a bandaid on systems. Make some harsh and radical decisions upfront. 

And that will give you dividends further down the line.  The consequences I've seen companies today were struggling with that, and they can't really meet customer needs with that.

They’ve had to write off, they've accumulated a lot of technical debt and they've had to write off a lot of things. So my advice is not to have bandaid approaches around systems. 

Carlos. What do you think about the ITPs? 

Carlos Cesta: I was thinking about, as it relates to the deal side, that issue gets even more amplified if you have an earnout in place. 

I've been through companies where the first was like let it be whatever platform they're on their own, just to become a bigger problem later down the line. 

And then corporate, it comes to me and says, right now, from now on every year that we do, they have to take these systems. By the way, you have to negotiate the price with them. I felt it's very disruptive to the deal team. It feels like a little bit of retreading. 

What are you trying to do is to make those costs and how they're going to affect the company's P&L upfront. So those spots go back to that spiral that I was saying, if you're going to force a system in there you're going to mess up their cost structure. Then you're affecting the earnout. 

So you have to be careful about how you're thinking about structuring the whole deal thesis. People are gonna be unhappy.

How do you know when an integration ends? When is it over? Is it over when the last IT system is integrated? Is it over after a hundred days?

Javid Moosaji: From my perspective, it goes back to what were the original KPIs around integration that we're set at the forefront. 

So typically you want to have some KPIs around customers, around your finance, around the human element of it.

So if you've got some core integration, milestones and KPIs, once you've achieved those, then you can officially say integration is over and then you transition that into either a business as usual or into some form of a transformation stage.

Integration is over when you've hit your integration milestones. That's the short and sweet answer. 

Carlos Cesta: When your synergy is not achieved, if they aren't, then they become a workout and the workout is also probably the integrated person. So, those things don't happen naturally for an extensive period.

Stacy Hendricks: Some integrations can go on. A couple of years. When you get past the hundred day period, is there really a typical milestone in integrations, how do you keep an integration team engaged? If you need people to continue on?

Most companies don't have a dedicated M&A IT team and a dedicated M&A HR team. So how do you keep those teams engaged? 

Javid Moosaji: One way is probably is to include something in their scorecard, personal objectives that somehow link to the acquired company or the combined company. 

That’s one way to keep engagement so that you're not losing, touching on cultural integration that can't be done in a hundred days. 

Some cases can't be done in two years, so what are some of the elements that can be incorporated in the scorecard and then drive that all the way down? What gets measured, gets managed, right? 

So, then you can kind of ensure engagement around that process. 

Carlos Cesta: Yeah. I always thought about it, depending on the scale of the company. If it's a small company you can do that. Because we were talking about the profile of the lead integrator or the integration person being someone that has experience in the business.

I always thought about it . And never been able to do that, like a bench of people, or like rising stars into the businesses. They want it to do one integration, then go work for that company, take a leadership position in that company. 

I was only able to do that, but I think it's a great opportunity, a great opportunity for rising stars, in whatever discipline. You can be in different disciplines. 

You can establish a bench of people that rotate going to a project and end up staying with the acquisition or the portfolio company. Maybe that's a way to actually, not only financially. but like career-wise to position people to be sent away. 

When facing periods of exclusivity, how do you prioritize integration planning while also considering that you need to complete diligence in a very tight timeframe? 

Carlos Cesta: It's been done. We just have to put those integration plans together with the information they have, it's been done. But again, you're compromising part of it. 

So I think it affects how you're gonna price a deal. You’re basically increasing the risk of the deal.

So if I'm in the shoes of the sponsor, I was going to say you'll have limited time to do this, this integration plan. So I'll probably pay less, or  we're definitely taking more risks.

Javid Moosaji: If you've got limited time to do some kind of due diligence, how does that impact integration?

No, I echo what Carlos just mentioned. It's important that there is sufficient time to be able to actually understand what's under the bonnet. 

Otherwise, it definitely should be it, should affect your view or the valuation. And then potentially, or not. 

Stacy Hendricks: Well, I'll tack on one point to that when we do integrations or when I've done integrations in the past, one of the edicts during the diligence process is that we are not only talking about a go, no go decision.

But we are doing integration planning during the diligence process. And it's a dual goal. And so the teams know that going in, they know what the objectives are, so it's not just a should we do the deal, but it's how we should do the deal. 

So I think we need to wrap up, I really appreciate both of your time and all of your wonderful insights. I really appreciate those of you who were able to join us. And thanks again to M&A Science, Kison and your team for putting this together. 

Javid Moosaji: It was a pleasure.

Carlos Cesta: Thanks Stacy, thanks, Javid.

Kison Patel: Thanks so much for listening to this episode of M&A 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@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, and guides. Thank you again for listening to M&A science. See you next time. 

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