Introducing M&A to a Larger Company

Ever wonder what happens when a first-time acquirer merges with a serial acquirer? In this interview, Jeff Hennig, Vice President, Corporate Development at AMD, and Dan Menge, Head of M&A Integration at AMD discuss how to introduce M&A to a larger company.

Introducing M&A to a Larger Company

17 Oct
Dan Menge
Jeff Hennig
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Introducing M&A to a Larger Company

Introducing M&A to a Larger Company

“Playbooks are only as good as the people using them and their knowledge.” - Dan Menge

When two companies merge together, there will be overlaps that result in winding down functions. But what happens when there are two functions that perfectly complement each other? This episode will talk about how AMD acquired Xilinx and how to introduce M&A to a large company, featuring Jeff Hennig, Vice President, Corporate Development at AMD, and Dan Menge, Head of M&A Integration at AMD.

special guests

Dan Menge
Head of M&A Integration at AMD
Jeff Hennig
Vice President, Corporate Development at AMD

Hosted by

Kison Patel

Episode Transcript

Xilinx and AMD deal

J.H.: The deal structure and the team structure was a merger. They had a pretty seasoned strategy team that also did some M&A and some venture investments. We didn't really have a strategy team. The strategy was really driven from our CEO and we were very experienced more on the M&A and integration side and venture side. So we complimented each other in terms of those two groups coming together, post-close. 

D.M.: They had done some deals historically, but there wasn't really a programmatic approach or a full team, and a methodology playbook for the integration side. We were fortunate that we were able to keep our partnership as we moved over from Xilinx to AMD. 

J.H.: The expectation is we'll continue to be acquisitive doing strategic M&A. We did do a deal right after we merged with Xilinx. So we bought a company called Pensando, which closed back in late May, so that if any indication of three months or in a less than three months after closing and to Dan's point of 49, almost $50 billion deal, we're out shopping and doing another billion dollar plus deal. I think that kind of gives you directional sense of M&A's role of the company going forward. 

Lessons learned on being acquired 

D.M.: It is a completely different perspective. It's from the point of a practitioner, it's a good experience to go through because it is informative to how we pursue deals in the future and how we think about employee experience and communications beyond the nuts and bolts of the integration

J.H.: The culture as well. As a deal guy, a lot of times those are secondary or tertiary to what you're thinking about in the midst of a transaction, but they're really important.

And my biggest takeaway was now I know what every single employee feels when we announce a transaction. And I've experienced those thoughts. And I think that makes M&A more relatable.

It allows you to think through either better ways to communicate or anticipate employee questions or onboarding-related matters. All these things can really help improve getting to close and post-close and having the acquired employees feel more like part of the team going forward. So very very educational for me personally, 

D.M.: Part of the role at Corp Dev is to be an advocate not just for our own company, but for the target. And now we've been the target. we've felt some of the pain or we've understood where things could be better.

We've started to understand the importance of communication in change management and all of those aspects of employee experience. There's a lot of work that hits the employees and we need to be very thoughtful about what that legacy team is doing and what the additive integration work is going to do to them.

The priority should be business continuity and right behind it should be employee experience. Balancing those two can be tricky.

Communicating strategy with the leadership team

J.H.: The leadership team is pretty heavily involved in the strategy. There are certain inputs from all the different leadership around areas of focus. Obviously, corporate strategy at the top level has a significant amount of involvement from our CEO, Lisa Su.

We’re trying to break everything down into the nuts and bolts within the different business units and then make those actionable for what Dan and I do. And that's again, inputs from really the entire executive team to a certain extent, but it is an iterative process and it's something that is constantly evolving.

Developing the M&A Function

J.H.: AMD saw value in the fact that Dan and myself had done a number of transactions. We had processes well in place at Xilinx that worked and were proven to work. It’s an opportunity to evolve those as part of a broader, much larger company that has more cash flow, and could do some different things plays in different markets. So we presented to the leadership team and educated folks at AMD. 

D.M.: When combining M&A abilities, the first thing that you need to do is understand where you are. 

  • What is the company's culture 
  • How receptive they are to new processes 
  • Who the decision-makers are 

We have to recognize that we have a new set of players now, not only at the executive level but at the working level. So we're starting with a lighter touch approach. Something that is more palatable.

It's easier if you start small because they also have work outside M&A. We need to show that having some structure around deal making or deal execution or integration execution has a lot of benefits compared to when people are left to their own devices to go off and get these things done.

So we started small and during the upcoming months we are going to implement playbooks and processes more fully in AMD but that's going to be with the partnership of a number of people. 

J.H.: It's a work in progress and it is going to take some time. We're starting small but the deal flow is not slowing down it's actually speeding up. The deal flow is there we just have to work on building that muscle memory with folks across the organization to get more programmatically and efficiently.

Working with business leaders that are new to M&A

D.M.: We have a great team and people who are very experienced functionally but maybe not as used to working cross-functionally in pursuit of M&A. Part of our role is to educate, expose, and be mindful of what people are able to digest and really focusing on those things that add value.

But we're looking to build those teams out in a way that we can be assured that when we moved into the next sizeable deal we have a good structure in place and people have that muscle memory so that we can be efficient once we start moving. 

J.H.: The leadership team at AMD knows how to do M&A right. They participated in the Xilinx deal and there are some deals that they did 5 to 6 years ago. But the biggest change they have to learn is decadence in space around deal-making and the amount of time that these transactions can take.

Especially if you're doing multiple transactions that are going into different business units, the support functions still need to be able to help out with certain aspects of the deal. 

They need to learn how to do it programmatically and repeatedly and that's where we come in trying to educate and establish more processes. Because it's one thing to just do a deal once every 5 to 10 years. It's another thing to do 5 to 10 deals a year, and it's just a different level of commitment that needs some buy-in, education, and structure. 

D.M.: There's also this goodness about having some continuity across the teams. Having a responsive team that is going to be ready when it was deal time is critical to our success at Xilinx. 

We had a team who was comfortable enough with each other and knew what other functions were delivering without us having to push them. That's the muscle memory in the kind of relationship we need and it takes time to build that. 

Working with functional leaders 

D.M.: It was beyond just meeting with folks. We did bring in some outside advisors to do their pro bono pitches. And I think it's always useful to get that external perspective so that people see what are ostensibly best practices in. 

For example in IT M&A integration. It really gets the juices flowing and the leaders thinking about if we're doing these deals, there are other considerations for IT that I might have otherwise on a daily basis.

And I'm clearly going to need to allocate more people because a sizeable deal brings a sizeable number of processes and tools and terabytes of data, all of these other things that need to be considered by the function. So that was a good way to get people exposed to what was out there and what they might be getting into.

And then for quite a period of time, back in the Xilinx days, we had biweekly sessions where we would have all of our functional leaders expanding anywhere from, HR, to IT, to facilities, join us and we'd actually have information-sharing sessions. 

And these were topics that included due diligence. All the way through integration planning and execution and all the rest. So we spent a lot of time back in those days, doing that kind of thing.

And much of that resulted ultimately in us getting some pretty robust documentation together, really our M&A playbook that we've memorialized in a share point on Xilinx's side. 

What goes into playbooks?

D.M.: When I think about playbooks, it's an overarching term, but we have at our Corp Dev level an overarching process flows for the deal side and integration side. And that's the baseline people on what the key deliverables are across the various phases, anywhere from strategy and targeting all the way through integration execution.

We also have further definitions of things like default charters in team structures, process flows, and governance structures. It's all of those things along with supporting templates, of course, because we wouldn't be a Corp Dev team without templates.

However, it's only as good as the people operating the playbooks and as good as their knowledge. We have plenty of stuff that worked very well for that group of people, and we had a stable group of people at Xilinx, and the muscle memory was largely established. 

In some areas of the playbook, very little guidance was required. They knew what the Uber objective was, and we weren't necessarily terribly directive about using templates. 

Now, if you switch over and you get a new set of people, you can imagine that it's not going to be a natural experience, they wouldn't know where to look or more context maybe needed before they go off and develop an integration plan, for instance, if they've not yet had any experience in developing that. So that's where we are today with our playbooks. 

Making People Adapt to Changes

D.M.: We will sometimes have to address problems or introduce people very quickly to a deal and deliverables needed without necessarily having the time that we would like to provide context and training in all the rest.

I think it will be a bit of a mix. We'll resolve problems as they come up and then separately we're trying to work a path towards more of a programmatic approach to upscaling and training folks as we get those folks identified on the broader M&A team. 

J.H.: There's no easy solution for either in implementing a playbook or change management. Because M&A is so dynamic that there's never going to be a storyboard that you can follow and, figure out a solution for every single problem. It's not realistic.

There's always something that comes up in every deal that is unique and maybe somewhat tangential to what you've experienced before, but it's still different. And I think for change management, one of the things to highlight there is it's an engagement and it is very unstructured as much as we can set boundary conditions. 

And certain companies value structure more than others. And I think that, with respect to being in a larger company where processes are very well in place, there's a bit of getting comfortable with uncertainty and risk. And the best acquires out there are the ones that understand the trade-offs and risks of deal-making. 

Top lessons learned 

D.M.: Jeff and I are both proponents of a fully aligned Corp Dev team. This is considered the best practice but most people are just giving lip service to it. We partnered very closely starting early on in the Xilinx days and we not only work well together but we game plan together. 

You can imagine we're often addressing the same set of constituents, whether that is business sponsors or it's the folks within key functions like HR, finance, legal, tax, It, and others. And it doesn't make sense for those conversations to be bifurcated. 

It's not a good place to be when Jeff tells them one thing and sets expectations and then a week later I come in and preach a different message from what jeff communicated.

So jeff would pull me early on things and I could figure out how much time I need to spend there. Conversely, Jeff will stay for quite a period of time because he was on the front end and developed a lot of key relationships. Also, he understands the deal model, the deal thesis, and those elements that are critical. So we really have some good continuity. 

The deal team and the integration team should partner up and work closely together. We encourage our teams to often be in the same meetings. We're in diligence together, some of these phases where there is naturally overlap. 

J.H.: A lot of it is combining activities together. We can talk all day about the processes and skills that you need to build out your own team but it's really about the culture fit that Dan articulated very well. We have a team that likes working together and knows how to work together. There are no real sharp elbows. 

When Dan and I started we both respected each other's roles within the company and understand the value of each other. We also both understood that we need to be in constant communication in constantly aligned to make this work. 

So it all boils down to a hiring decision.  you have to hire people who will fit with one another. If the deal guy is overwhelming the integration guy, and there's not really alignment there, that can create a lot of animosities. 

If you know the integration guy is not able to support some of the front-end work or is pushing back a lot more, that just creates friction. And you really want this to be pretty seamless. 

D.M.: So anyone in your company that does the hiring they have to look beyond the raw skill set and experience. They need to figure out if their integration lead is compatible with their deal lead, and vice versa.

One of the things you can do is let the deal read me a part of the interview so that person can really assess if there would be compatibility issues.

Best Advice from Corp Dev

J.H.: Bringing integration early will save so much effort and frustration. A lot of times key questions are overlooked when doing preliminary due diligence such as:

  • What is the offer strategy? 
  • What is the go-to-market strategy? 
  • How do we operationalize this? 

Involving the integration lead early will help you start thinking about that during that face and there is a lot of benefit to it. 

Best advice from Integration

D.M.: A lot of times what's overlooked is the sponsor engagement. You need to make sure that your deal sponsor is really focused on the deal in addition to his or her day job, which often is leading a BU. 

And that's something where I rely on Jeff to start that conversation that allows me to continue it later in the deal.

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