Four Questions That Defined a $1 Billion Deal

Background

I grew up in Montreal and Toronto. I trained as a mechanical engineer at Queen’s University in Canada, and later completed my MBA at Clemson University in South Carolina. My background has primarily been on the business side. I started in product marketing and commercial roles, moved into advanced marketing, and then grew into corporate strategy. That progression shaped how I think about growth, positioning, and long-term value creation.

One of the unique aspects of joining Milliken was the ability to define what the role needed to be. I actually wrote my own job description when I joined the company. One of the advantages of private companies is the flexibility to structure teams around what the business truly needs.

I joined to drive innovation and strategic marketing, and along the way began dabbling in M&A. Over time, I was asked to write a new job description as I moved up into leading corporate strategy for the overall company.

The role ultimately became about waking up every morning and asking: this is a great company—how do we grow it, and what tools do we have available? That meant balancing organic and inorganic growth, leveraging a strong balance sheet, and respecting the long history of the company.

We aligned on a corporate strategy focused on long-term sustainability—thinking in generations, not quarters. The goal was to build a portfolio that could deliver stable, consistent dividends to shareholders over time.

At the outset, we did not have all the answers. What became clear was the need to reduce cyclicality in the business and build a more resilient platform—one that could support steady growth and reliable returns for a growing shareholder base.

M&A experience

I am not an investment banker, so I am not going to say that I have completed 200-plus deals. My experience is closer to 10 to 15 completed transactions. What is interesting, though, when sitting in a corporate function, is the volume of opportunities reviewed. I have probably looked at close to 300 deals.

The reality is that we are very selective in what we pursue. Being a private, family-owned business rather than a multi-billion-dollar public company with a long transactional history, culture fit plays a central role in every decision.

‍

A great deal of deliberation goes into building from strategy first. The questions are always consistent: What do we want to do? How do we want to grow the business? How does M&A support that growth? Only after those questions are answered does fit come into focus.

I am fortunate to work in one of only six companies that have been recognized as a World’s Most Ethical Company for 19 consecutive years. That distinction matters. When values are that deeply embedded, they directly influence how M&A is used as a growth tool.

Those values shape the strategic thinking behind every transaction and reinforce the importance of alignment—not just financially, but culturally—when evaluating acquisition opportunities.

Rethinking Business Strategy

This is a mature industrial company that has been around for a long time, and many of the businesses we operate today reflect that history. The rethinking process required stepping back and recognizing that there are businesses within the business. The question becomes how to break those down and look at the fundamentals.

That starts with understanding the growth outlook for each business, the role it should play in the portfolio, and how capital should be allocated. It also requires asking where we are a good parent, where we are a great parent, and where we need to be better.

A significant part of the strategy is portfolio mix. In a private, family-owned business, the expectation is that reinvesting in the company should outperform alternative investments. The question becomes whether the business can consistently beat the S&P 500 over time and provide a stable, growing dividend. 

That requires disciplined financial modeling. In an organization like this, there is strong clarity around financial priorities. The company is run to pay dividends to the family, reinvest in the business, and support meaningful charitable contributions in the communities where it operates. With visibility into shareholder growth and dividend expectations, there is a clear understanding of what the financial outcomes should be.

Executives in private family businesses are often rewarded on enterprise value growth. However, family owners tend to care more about dividends. Increases in enterprise value can create tax consequences if shares are ever traded. As a result, the strategic question simplifies to how to grow the dividend consistently.

That leads directly to evaluating whether the portfolio has the right mix of businesses to support that outcome.

Around 2013 to 2015, we raised our hand and acknowledged that the portfolio was not optimally positioned. The balance sheet was strong, the business was performing well, and banking support was solid. The issue was not whether to sell assets and repurpose capital, but how to augment the portfolio.

We evaluated whether bolt-on M&A could increase competitiveness. In many cases, that was not viable because we were already leaders in niche markets with high market share, and antitrust constraints limited roll-up opportunities.

This led to what I describe as surgery on the portfolio—identifying near-adjacent moves where we would be the rightful owner and could create value.

We developed a matrix, often referred to as a bubble chart, that mapped businesses based on competitive position and market attractiveness. This helped determine which businesses should function as cash generators and which warranted investment for growth.

From a strategy perspective, trade-offs are fundamentally about choice. Portfolio strategy requires deciding where to disproportionately invest to drive growth.

From there, we built adjacency maps. These considered geography, product sets, technologies, infrastructure inputs, and core capabilities. The focus was on understanding what the market recognized as our strengths and how those could be extended through adjacency moves.

When reviewing the portfolio, we asked whether there was another leg we should add—one rooted in a stable, less cyclical market where we already had a right to play. That analysis ultimately led us into healthcare.

The objective was to move toward non-cyclical, more recession-resistant businesses. While no business is entirely recession-proof, healthcare offered greater stability. COVID challenged some assumptions, particularly in medical devices, but the move still aligned with our strategic intent.

The healthcare acquisition allowed us to scale in an area aligned with our core technologies and where we knew how to be a good owner.

The second-largest deal in company history marked a shift in thinking about what types of businesses we were truly great at owning. We evaluated the opportunity through a business model adjacency lens. While we were already strong operators, this acquisition extended the portfolio in a meaningful way.

Shortly after, another opportunity emerged that leveraged our customer intimacy and allowed us to move into advanced chemistry. That became the largest deal in the company’s history.

Together, these three large acquisitions reinforced a portfolio strategy centered on reducing cyclicality and growing in the right areas. The largest deal represented a step change in scale, but more than three years in, the business has grown by 65% and now contributes meaningfully to company profits.

The second-largest deal required nearly two years of strategy work. We assessed the strength of the market, the quality of the businesses, and whether the space was right for us. Over time, we engaged the ownership group and encouraged a limited process.

Internally, we follow a three-tollgate system to ensure alignment on strategic fit and market relevance. On the target side, there are also three tollgates, with the second typically tied to the IOI.

By the time we submitted the IOI, we already had board approval and capital allocated. This allowed us to enter the final phase with full confidence. We positioned the IOI as firm and final, with a defined timeline and minimal remaining diligence.

That certainty mattered. It was one week before Christmas, and we offered a fair value with the ability to close quickly. While we were not the highest bidder, we were the most certain. The sellers chose certainty and speed over prolonging the process.

We submitted the IOI, and when the LOIs were due—since the process was already down to a small group—we essentially said the LOI would look very similar to what we were already proposing to close. Our IOI was effectively our LOI. It did not change much because the work had already been done.

That was very intentional. It came from working ahead—being clear on the strategic rationale, pressure-testing the investment thesis, and provoking the thinking early to confirm this was truly what we wanted to do.

This approach may be an anomaly, but it worked for us. We applied a similar approach the next time as well. A lot of this ultimately came down to how we conducted diligence.

The real advantage comes from doing the strategy work upfront and integrating it directly into the deal process. In our case, corporate strategy gets involved very early—starting with the question of what we should do—and stays involved through corporate development and the transaction itself.

Another member of the team focuses on project managing the process, but corporate strategy does not stop when the deal closes. Once the transaction is complete, we step back and say: we created the investment thesis, we ran the diligence, and now we have the keys.

Day one is about welcome and alignment—bringing everyone together and reinforcing that they are now part of the family. Day two is when the real work begins.

That is when we revisit the strategy, validate the fact base from diligence now that we own the business, and focus on how to drive growth more effectively with full access and transparency.

The strategic plan is then embedded into the corporation’s long-term capital plan. More importantly, it is developed collaboratively with the new leadership team—a hybrid of our people and theirs.

We run a focused process early to build shared ownership around the long-term vision. This is not a three-year plan. Given the nature of operating in a private, family-owned business, the thinking must be more aspirational. As a result, we operate on seven-year strategy plans.

Seven years is the right amount of time to be aspirational. We operate with a three-year operating plan and a five-year outlook, but the seven-year plan allows us to truly stretch and define where we need to be.

In some cases, we extend that horizon to seven or even ten years, depending on the buying cycles of the business and the length of the qualification process, particularly in certain chemistry markets. A longer-term outlook provides the appropriate context for decisions that require patience and sustained investment.

Synchronizing long-term strategy with the master capital plan sends a clear signal to the incoming management team. It demonstrates that the company is not simply acquiring a business, but committing to invest in it.

More importantly, the strategy is built together. That shared process creates a strong sense of ownership. Everyone understands the direction, participates in the choices, and aligns around the same priorities.

At the end of the day, strategy is about making deliberate choices—and ensuring the organization is unified behind them.

Adjacent M&A

The reason for going this deep is that all three of these large deals were done to transform the company and fundamentally reposition it. To give some context, I used to meet with investment bankers in Midtown Manhattan, and they would say ask what I’m trying to do with a small chemical arm since I am a textile company. They would frame the valuation around that perception.

Fast forward to recent conversations with those same investment bankers, and the narrative is completely different. Now the feedback is, you are a leading advanced materials company. They still ask whether textiles are part of the portfolio, but the perception has clearly shifted.

When that perception comes back through the market, it is easy to point to the enterprise value that has been created. There has been a substantial increase in enterprise value through this portfolio evolution.

That said, these were not bolt-on M&A deals. The value was not built on hard synergies. It was built on soft synergies and belief.

That belief came from doing the strategy work—understanding where we were a rightful owner, knowing we could grow these businesses, and recognizing how each addition would strengthen the overall portfolio. When these businesses were placed into the mix, they made the entire company better.

This is not a buy-it, fix-it, and sell-it model over three to five years. This company does not have a history of selling businesses of relevance. The mindset has always been to build for the long term.

The adjacency map reinforces that discipline. It forces deliberate choices about where to deploy M&A capital. When deals are driven by soft synergies rather than cost takeouts, clarity of strategy becomes even more critical.

That is how these investments were made—and how the transformation was achieved.

Hard vs Soft Synegies

To me, hard synergies are cost savings that come from eliminating duplication. That usually shows up in back-office functions. You do not need two CFOs in one business. Those are straightforward and expected.

Beyond that, there is not much depth in hard synergies. We are not shutting down plants, consolidating operations, or creating scale by making the same products and buying more of them. We recognize that the amount of hard synergy available is limited.

Most of the value comes from soft synergies. That value shows up in growth—specifically, belief in a new sales forecast and belief in a new financial forecast for the business. It is the confidence that ownership itself will accelerate growth.

Put simply, because we own the business, it should grow faster. It should outperform the prior plan and exceed a basic 3% growth threshold.

The adjacency map helps clarify where that growth can come from. At a high level, the company operates across four business pillars, roughly twenty strategic business units, and multiple profit centers underneath each one.

When doing strategy, it is not enough to stay at the SBU level. The analysis has to go down to the profit-center level to get a granular view of where growth is truly possible. Every SBU has an adjacency map, and in some cases, profit centers do as well.

The adjacency map evaluates a series of dimensions and asks a simple question: what would the marketplace say the company is truly great at? Having a product or participating in a market does not automatically mean there is strength there. Market perception matters.

The exercise forces clarity around core capabilities and breaks them down across different verticals—geography, technology footprint, and other business-specific nuances. One of the most important nuances is the business model itself.

The question becomes whether the business model can be extended. If the company sells widgets, should it also be in specialized distribution of those widgets? Should it move upstream or downstream?

The adjacency map is built by starting with the closest opportunities and expanding outward. Once that structure is in place, the final question becomes how M&A can unlock those adjacency moves and accelerate growth.

That is how the adjacency framework connects strategy directly to M&A decision-making. You end up with an interesting spider map. When you look at it, there is a section that asks a very practical question. In this case, the example is a medical business. You may be strong in treating certain wound types, but the question becomes: what is the market translation to move into a different wound type or a different disease state?

From there, you evaluate whether the business can scale simply by expanding across disease states using the products you already have, or whether you need to add new products to the portfolio. That distinction is critical.

What becomes particularly powerful is when this framework is fully developed. I have taken these spider maps into the boardroom and used them to explain exactly how an acquisition stretches our core capabilities and opens up new verticals for growth.

From that point, conviction starts to build. You build the growth story, then the financial forecast, and then the belief—along with clear growth thresholds and the soft synergies you expect to realize. That is what ultimately supports the rationale for doing the deal.

At the end of the day, the question is simple: does the math work? Identify what’s closest to your core as an adjacency and where those soft synergies would fit in. If this were purely an organic growth play and the intent was to move down a single vertical, you could simply push straight through it.

However, when M&A becomes part of the strategy, proximity to the core matters. The closer the opportunity is to the core business, the greater the confidence in execution and the ability to create growth.

From this work, you start honing in on the strategic options for how to grow from the core. You have the visibility to see those options clearly, and they then become the playbook.

The playbook defines what to acquire, how each option fits strategically, and which types of companies naturally align with that direction. From there, we build our M&A approach directly from the adjacency map. We translate strategic options into playbooks, build out target lists, and then actively engage the market.

A significant part of growth comes from being out in the world and having direct conversations. The message is simple: here is our thesis for why you should be part of this family and this business. That is how M&A gets incubated—it is intentional and relationship-driven.

‍

It is also not a solo effort. Business is built on networks. The question is always who knows someone who can help open the door and start the conversation. 

We do not win by waiting for books from investment banks. Larger players can do that. Our advantage comes from moving directly from strategy to targets, completing internal tollgates on why those targets are attractive, and then engaging with real conviction.

That conviction changes the conversation. It becomes less transactional and more strategic. Often, it is that perspective—why we would be better together—that gets us in the door.

Prioritization of the Spider Map

Each vertical has a core strength, and the question is always which adjacencies are closest to that core and most natural to grow into.

For example, if the business is very strong in treating burns—where patients need to stabilize the wound and rebuild tissue—we already have a suite of technologies that support healing once that reconstruction is underway. From there, the next adjacency becomes clearer. Burns lead naturally into areas like diabetic foot ulcers, which are also complex and difficult to heal. From there, the next step may be venous leg ulcers or venous insufficiency.

In this case, growth comes from market development—moving from one wound type to the next, using the same core technologies. But the broader question is how to round out the offering with complementary technologies. The products required to heal a burn are not identical to those needed for venous leg ulcers, so additional solutions must be added.

That often means taking the existing products and augmenting them with new products or technologies—building a more complete solution set rather than relying on a single offering.

At the same time, it is critical to evaluate whether the underlying infrastructure is in place to support that expansion. Sales models, operating capabilities, and delivery mechanisms must be able to scale alongside the product portfolio.

Put more simply, most successful businesses are built on a scalable, repeatable growth model. M&A is then used to add capabilities, products, and solutions that reinforce and accelerate that model, rather than disrupt it.

‍

People often assume that working in a corporate function means relying on investment banks to generate M&A ideas. We do work with investment banks, and we do ask for ideas. But the difference is that we direct them through a clear strategic mechanism. We are explicit about where we want to grow and which strategic spaces matter to us.

Once investment banks understand that, they open doors differently. They want to represent us, and they want to work with us. But once the door is open, the conversation shifts.

At that point, it becomes about telling a story. People resonate with stories. The conversation starts with why we are relevant in the industry and what the values of the company are. More importantly, it explores how those values connect with who the other party is and whether there is an opportunity to build something together.

This approach is not unique to one company. Any organization can do this by clearly articulating why it exists, what it stands for, and how that aligns with potential partners.

One of my favorite examples came from a meeting where a potential partner visited our corporate campus. We spent time discussing what we could do together, and afterward, I walked with him back to his car around the campus.

Instead of asking what was holding him back—a typical M&A question—I asked something different. I asked what his dream was for his business. He shared his vision for his family-owned company. Then I asked whether that dream could be accelerated under our ownership, now that he had seen the campus, experienced the culture, and heard our story about why we believed we should work together.

I have used that question three times. I did not need it on the largest deal, but on other transactions, it made a real difference. In one case, the individual told me that during his long drive home, that question was all he thought about. Two days later, I received a call: the deal was on.

That is the power of conviction, alignment, and leading with purpose rather than process.

Making Deals Actionable

This is part of our tollgating approach. The first tollgate is simple: does this target make strategic sense? If the answer is yes, we develop a preliminary thesis.

The next step is to get out and talk to them. That has to be done carefully. If the message is, “we are thinking about buying your company”, many people will shut the door immediately. That is not how these conversations should start.

This is where the role of ambassador matters. When representing the company, the goal is to live the values and connect the dots clearly. People do not engage because of process; they engage because of how the company is represented. If the story is compelling and authentic, most people will take the meeting, at least out of curiosity.

The next phase is provocation—but through questions, not statements. Instead of telling someone what should happen, the conversation is framed around exploration. Walking around the campus and asking whether the company could be better together is a form of provocation. It invites reflection rather than resistance.

That same philosophy carries into management presentations. Whenever possible, we invite targets to visit us. We want them to experience the environment, the culture, and the people. The objective is for them to test whether they can see themselves as part of the organization—whether they feel they belong to the family.

In one early deal, the owner came to that realization himself. After engaging with us, he came back and outlined where the synergies were, which roles should stay, which roles could be eliminated, and how the business could be built together.

Many entrepreneurial owners care about financial outcomes, but there is often a deeper concern about where their company ultimately lands. That emotional component matters. The approach deliberately acknowledges that dimension while ensuring the deal fundamentals remain sound.

In many processes, the front end of the deal is driven by emotion. The question is whether this feels like the right home and the right partner. Two of our deals were done this way, where owners chose to sell to us without running a formal process.

Even in competitive processes, this approach builds preference. When decision-makers feel alignment and trust, the instinctive reaction is that this is the right path forward.

Eventually, the focus shifts to the numbers. At the end of the day, the economics must work. But by the time that happens, the emotional decision has often already been made.

Winning Deals through Trust

On the second-largest deal, we were not the highest bidder. When management was asked for input on the final three options, the decision was unanimous. They wanted us.

The same thing happened on the largest deal. We invited management to visit us as part of the process, allowing them to see and experience who we were. When the deal closed, we again were not the highest bidder. We were management’s choice. When management preference aligned with the owner’s decision, the outcome became clear.

At that scale, the difference might have been twenty million dollars. The decision came down to trust. The sellers chose us because they believed we would take care of their people—the people who mattered most to them.

What was particularly interesting was how that trust carried into diligence. We performed significantly better in the diligence process because of the relationships that had already been built.

After closing, I learned that our diligence questions were prioritized. We were given more time and more attention. The reason was simple: respect. The way we treated people throughout the process changed how they engaged with us.

That is the emotional side of M&A. These softer skills are not optional. They materially affect outcomes. But they only work when they are grounded in strong strategic conviction and internal alignment.

As my boss said to me recently, there are not many people he would trust to fly across the world and put a number of that size in front of a company. That trust does not come from confidence alone. It comes from alignment.

I would not trust myself to do that either unless the strategy was clear, the conviction was strong, and the organization was fully aligned behind the decision. That alignment is what makes disciplined, relationship-led M&A possible at scale.

Biggest Deal using 4 questions

To give a sense of scale on the largest deal, close to one hundred individuals were involved in diligence. In our standard approach, roughly eighteen functions conduct functional diligence. With that many people and checklists, it is easy for the process to become bogged down.

The size of the team reflects the depth of what we need to validate. By the time we reached this stage, we had already confirmed the strategic rationale, cleared the market tollgates, and validated the company-level tollgates. The decision to pursue the deal was sound. But the real work happens between the IOI and the LOI.

At that point, strategic conviction must translate into disciplined diligence. Our diligence effort cascaded into four core questions that guided everything we did.

The first question was whether we truly believed in the uniqueness of the technology and its ability to sustain a competitive advantage in the marketplace. That required deep work from our technology teams and extensive review by intellectual property attorneys, particularly around the IP landscape.

The second question focused on customer concentration. We examined customer relationships, market constraints, and the risks associated with a highly concentrated customer base. The question was whether we were comfortable with that level of exposure.

The third question was about the long-term trajectory of the business. Did we genuinely believe in the growth potential across the specific markets we were targeting?

The fourth question, which is common in most deals, centered on talent. Who were the key people, and how would we retain them?

While talent retention is always important, this was not a hard-synergy deal. It was driven by softer synergies and growth, which meant risk tolerance had to be assessed carefully. Losing key talent in a transaction of this size would materially change the thesis.

In reality, the diligence hinged most heavily on two areas: the concentration risk tied to growth outlook, and the sustainability of the technology’s competitive advantage.

If the conclusion had been that the technology was strong but easily replicable, or that competitors could quickly enter the space, the deal would not have moved forward. In areas like biodegradable chemistries, belief in true differentiation and defensibility is non-negotiable.

Each of these four questions had supporting sub-questions. Every diligence checkpoint came back to the same discipline: how confident are we in each of these assumptions? That focus kept a complex diligence process anchored in what truly mattered.

It ultimately goes back to the adjacency map and how we were stretching our technology. In the core of that map, our strengths were clear. We had strong customer connections, deep customer intimacy, and a solid market presence. The strategy was to introduce a new technology into that existing foundation.

That required an extraordinary amount of work to truly understand the robustness, uniqueness, and sustainability of the technology’s competitive advantage. If we did not believe in that, the entire deal fell apart.

That was the first and most important question. The second priority was customer concentration—whether we could manage it and whether there were risks associated with it.

All four questions cascaded from that framework, but we were very clear on what mattered most. That is why the technology question was always positioned as priority number one.

Strategy behind the Deal

When you step back, great strategy is about answering the right questions. Strategy is about choice, but at its core, it is about clarity on what needs to be answered.

Every strategy project starts the same way: what are the questions we are trying to answer? The same logic applies when entering an M&A deal and beginning diligence. The focus has to be on the highest-impact strategic questions that anchor the investment thesis and explain why the deal exists.

If the deal is a simple bolt-on, the questions are straightforward. How strong are the hard synergies? How many manufacturing sites can be consolidated? How much fixed cost can be removed? Those questions directly determine whether the deal works.

In that scenario, other questions—such as long-term market attractiveness—become secondary. The market simply needs to be solid enough to support the forecast, because the thesis is driven by cost and efficiency.

This discipline matters even more when allocating significant capital. When the investment approaches a billion dollars, the risk is not lack of analysis, but analysis paralysis. The challenge is avoiding endless evaluation and instead anchoring decisions to a clear rationale.

The answer is focus. Be explicit about why the deal is being done and identify the few critical questions that must be answered. Build conviction around those answers.

That conviction carries into the boardroom. The board is not surprised. They are briefed early and kept informed on what is being explored. By the time a formal decision is required, the context is already established.

In the boardroom itself, time is limited. The role of management is to clearly restate the strategic rationale, revisit the most critical questions, present the answers, and show how those answers translate into financial returns.

At that point, the decision is not about volume of information. It is about confidence in the logic, the answers, and the outcomes the deal is expected to deliver.

Modelling the Deal

When it comes to modelling the deal, in this specific case, diligence showed that the customer base was more concentrated, but there was meaningful room to grow within that base, and we believed in that opportunity.

We also believed the technology would scale across markets in a very specific way. We modeled the growth and looked at it realistically. Even if we were only half right on the projected growth within the existing customer base, the returns would still justify the investment.

When you do deals of this size, internal resistance is inevitable. The CFO looked at the numbers and questioned whether deploying that much capital made sense. The CEO raised a different concern—we had never done a deal of this magnitude before, and the question was whether it was truly strategic.

Both were skeptics at first.

What shifted the conversation was grounding the discussion in the strategic rationale and the growth thesis. The turning point with the CFO came when I framed it clearly: if we are only half right on the growth assumptions within the current customer base, the deal still delivers the required returns. We also brought in third-party validation, including customer awareness studies, because we could not directly engage the customer base ourselves.

That evidence built confidence. Once the CFO became comfortable, I had an ally. That is intentional. My role is about influencing without authority. I cannot tell the CFO or the CEO what to do. Instead, the goal is to build shared ownership of the conclusion.

With alignment between us, the conversation with the CEO changed. He began to see the opportunity clearly and became a champion of the deal. At that point, the skepticism shifted elsewhere, as it often does.

This is the discipline of working the process internally—using tollgates, structured questions, and evidence to build conviction. Every deal has different dynamics and different risks. The role of strategy is to identify the beliefs that matter most, test them rigorously, and build confidence step by step.

Capital Allocation

We run a consistent strategy process across the company. Each year, we meet at a midpoint to review everyone’s long-term vision—what the seven-year outlook looks like and what is on each team’s wish list.

We take that input, synthesize it, and translate it into a portfolio grid. That grid becomes the roadmap for understanding the role each business plays in the portfolio. It helps us decide where organic growth deserves capital and where inorganic growth should be funded.

We ask direct questions. Are there inorganic opportunities worth investing in? Can we move one of the portfolio bubbles into a more attractive position? If not, and a business is a cash generator, then it is a cash generator. That business is not going to receive M&A capital. Capital has to earn a return.

There is only so much capital to allocate, and the competition for it is real. We spend an entire week reviewing every business in detail as a C-suite team. We examine the growth story for each one and run dynamic models to understand where growth is actually coming from.

This process has been refined year after year. We have been doing it for ten years, and it gives us a very clear view of where the M&A capital budget should be directed.

One of the ongoing challenges is that M&A capital competes with other capital needs. Investments to strengthen operations or reinforce competitive advantage draw from the same pool. That forces discipline. We have to be deliberate about where capital goes and why.

Before we pursue acquisitions, we step back and ask what we can afford, where we want to invest, and what the strategic rationale is. Conviction has to be clear before action follows.

Only then do we go out and engage the market. That may mean knocking on doors directly or amplifying our message through the investment banking community. We are selective about which bankers we work with, choosing those who are best positioned to help us in specific strategic areas.

We still review inbound opportunities and turn books quickly because we do not want to miss anything. But the core of our approach is proactive. We drive the M&A muscle through playbooks, defined target lists, and deliberate relationship-building.

The role of corporate development and corporate strategy is to act as ambassadors—getting out into the market, creating conversations, and aligning opportunities with a clearly defined strategic plan.

There is a strong team behind this work, even though it is not a large team. A large team is not necessary. What matters is that for every part of the business, there is a clear go-to person who can move quickly, supported by defined checklists.

For every deal, we conduct a customer awareness study. That is non-negotiable. We learned that lesson the hard way. In one case, we were so focused on getting the deal done that we did not run a sufficiently thorough customer awareness study. After the acquisition, we discovered that several key programs with major customers were winding down, and volumes declined within two years of closing.

Looking back, it was a clear failure in discipline. That experience permanently changed our approach.

Customer Awareness Study

The objective is straightforward. We want to understand the brand—how it is perceived in the industry relative to competitors. We want to hear directly from customers about their experience and perception, and we use third parties to do that work.

This is not a survey exercise. These are direct conversations. We conduct the equivalent of expert network interviews, triangulate multiple perspectives, and build a clear view of how strong the brand is in the marketplace. We are also looking for red flags in behavior.

If we hear patterns like competing purely on price or cutting deals in ways that are not aligned with how we operate, that is a clear warning sign. That goes directly against cultural fit. At its core, the question is whether the company is viewed as legitimate in the market. Do customers trust them? Why do they choose to work with them?

Another key part of the customer awareness work is understanding where the company’s real strengths lie. Are those strengths commercial? Are they technical? Are they driven by technical service and support?

That matters because part of our diligence is answering a simple question: what does it take to win in this space? As we look at adjacencies and move into new markets, we want to understand the scalable, repeatable model for success. How do companies in this industry win? What capabilities matter most?

From there, we assess why we would be a good parent—and where we could be a great parent. Cultural fit is evaluated alongside all of this. The customer awareness work becomes a powerful way to test those assumptions before a deal is ever completed.

We got burned because once we had the keys and were operating the company, we started seeing sales forecasts drop for critical product lines tied to key customers.

The question was why. The answer was that a major program was coming to an end—something we had not fully understood during diligence. That was a real surprise.

There were also initiatives in place that masked underlying customer health. On the surface, everything looked strong, but once those programs ended, the reality became clear.

Surprises happen in every deal. That is unavoidable. The message I always emphasize is to do enough strategic work and enough homework to minimize those surprises.

You can never make it perfect. The grass is never greener—it is just a different shade of green, with different nuances you have to understand and manage.

How to Move Quickly During Deals

When a deal starts, the first step is an internal diligence kickoff meeting. I bring together the right people immediately, including our legal team, to reinforce compliance and remind everyone of the do’s and don’ts.

Before anyone dives into functional diligence, we step back. The first questions are always: who is this company, why are we interested, and what is the strategic rationale for the deal? We clearly outline the key questions we are trying to answer.

At that point, the team has already reviewed the full diligence checklist—the hundred-plus items that typically need to be addressed. Instead of treating everything equally, we prioritize. We ask teams to focus first on the areas that directly impact the strategic questions.

Yes, everything still needs to be completed. Systems need to be reviewed, controls validated, and processes understood. But the real value of diligence is identifying failure modes.

For example, do their credit systems work consistently? Are there practices that could introduce risk or misalignment? The diligence teams are not just checking boxes. They are identifying issues that could undermine the core thesis or create challenges that must be addressed in integration.

At the same time, diligence surfaces items that need to be embedded into the integration plan from day one.

Diligence serves two purposes. First, it confirms the strategic rationale of the deal. Second, it triggers the most critical actions that need to happen early in integration.

During this phase, we also identify the functional integration manager. That individual owns the integration execution and carries the work forward post-close.

On larger deals, corporate strategy stays involved through integration. My role is to ensure strategic intent carries through, while the integration manager focuses on execution—connecting bank accounts, ensuring payroll runs correctly, and handling operational continuity.

Diligence also uncovers people-related issues that require thoughtful decisions. In one case, we identified differences in benefits programs. Moving employees onto our benefits plan would have increased their personal healthcare costs.

We decided to address that proactively by allocating additional capital to provide stipends so employees would not be financially disadvantaged. That decision was made during diligence. It was the right thing to do, and it needed to be reflected in the deal model.

The diligence punch list ultimately falls into three categories:

First, the strategic questions that must be answered to validate the deal.

Second, the critical issues that affect the deal model and must be included in the integration plan.

Third, the items that can be addressed after close once the company is fully owned.

That structure keeps diligence focused, disciplined, and aligned with both strategy and integration.

Culture

Culture kills deals. You have to know what you are buying and understand the cultural fit. Just as importantly, you need to structure the management and operating team in a way that drives solution co-ownership—building the strategy together with the back office of the company while preserving what makes the acquired business successful.

The largest deal is a good example. That business has grown 65%. One of the deliberate choices we made was deciding what not to change. They operate differently than we do as a larger company, and the question became how not to interfere with that.

They are not located near our headquarters, and we made a conscious decision not to relocate them. Keeping them where they are preserves their independent thinking and entrepreneurial mindset. We were very intentional about avoiding the instinct to over-optimize, centralize, or mechanize everything through the corporate center.

At the same time, you have to ask a fundamental question: why would they even listen to us? The answer is different in every deal. For some, it is about scale—we can help them grow faster through global reach. For others, it is about taking over the back office so they can focus on the business. In some cases, it is access to capital—they want a strong parent with a strong balance sheet that can invest in their growth.

Every deal has a different mix of those motivations. The job is to understand what matters most in each case and design the partnership accordingly.

‍