Name: Buyer-Led M&A™ Masterclass 10: Designing a People Strategy that Maximizes Deal Value
Uploaded: 2025-08-21T16:30:43.071Z
Duration: 1 h 36 s
Description: Buyer-Led M&A™ Masterclass 10: Designing a People Strategy that Maximizes Deal Value

Transcript for "Buyer-Led M&A™ Masterclass 10: Designing a People Strategy that Maximizes Deal Value": Now we're live. So, hey. I think we're gonna give it a minute for folks joining in. If, you can hear us, see us, please post and chat. I love to hear where people are dialing in from just to get a sense. And if you wanna put your role, I don't know if you're more on, like, the front end doing strategy, diligence, corporate development, private equity, integration folks, HR, I'd love to hear Tallahassee, Florida. Alright. David's first person to respond. I was just talking to Klint. Klint, heads up the HR m and a HR roundtable, and, they have a conference coming up in Boston. So I guess I'm gonna be attending. So if anybody's in Boston in September, I'm gonna be out there attending the HRM and A conference. Here we go. We got folks here, m and a analyst folks. This is gonna be a great session, but if anybody else knows M and A HR leaders, that's probably a good one that we can, share. Alright. We got UK. This is good. We got international already. Canada too. And Chicago, my hometown, London. Nice. I like seeing this. Well, I'm I'm gonna let some folks get in. Should we get the intros kicked off? There we go. Alright, everybody. Look at this. Got m and a project managers. Welcome back. You know, I'm, I just welcome back for me. I I just got back to New York City after a couple weeks in Europe, so it's great to be here. This is buyer led m and a master class. I'm Kisan Patel, the founder of DealRoom and host of the m and a science, podcast. And if you joined us before, you know this isn't another cookie cutter m and a webinar. We're here to challenge outdated playbooks and show you how deals really get done. Today, we're talking about designing a people strategy that maximizes deal value. And everyone always says that people are the most important asset, but few buyers actually manage people strategy well. To help us fix that, we got one of the best. We got Klint Kendrick, senior director of workforce integration and transitions at Walmart. To keep this session interactive, feel free to drop your questions in chat or in the q and a. And, yes, we'll send the recording afterwards. With that quick background on myself, I started on the advisory side of m and a, ran into the same inefficiencies over and over, and then eventually built DealRoom to solve them. And along the way, we launched the m and a science podcast to share lessons from real practitioners. Joining me today is Klint Kendrick. Klint has spent his career in post merger integration, helping companies navigate some of the largest, most complex transactions in the market. He's worked at several Fortune 500 companies. He knows what it takes to bring workforces together and unlock value. Today, you're gonna learn how to design a buyer led people strategy that drives value creation from the start, aligning leadership, assessing cultural fit, and activating teams so that integration accelerates instead of stalls. So we'll break down the agenda here. You know, I'm gonna set the stage covering the five pillars of buyer led m and a. This is the operating system for modern deal making. Klint gonna walk through how to design a people strategy that aligns with those pillars. And then we'll wrap with q and a, bring, you know, some bring your sharp questions up and we'll get them answered. And then, yeah, let's jump into it. So let's talk about why buyer led first matters. If you think of the traditional sell led m and a, it's pretty much like playing checkers while the seller is playing chess. Like, you're always reacting to their moves, their timeline, their priorities. The seller and the banker control the whole narrative. Buyer led flips that around. You're the one setting the agenda, defining success, and building integration into the strategy from day one. So it's not about being aggressive, but it's about being intentional. And this leads us to our our framework. These are the five pillars, never emanate on impulse, united process, unified process, tools and data, synchronized diligence and integration, built for scalability and a win win approach. So in every master class, that's what we try to do is tie back to these pillars. Today, we're gonna focus on pillar one, never emanate on impulse, and pillar five, a win win, where people strategy is critical. So we'll just cover the quick pillars here. Pillar one, never have any impulse. So this is where deals, like, can blow up if you don't have a clear plan. And being buyer led really means, like, fleshing out your strategy so that you know exactly why you're doing the deal. And it makes it a lot easier too when you come across things inbound. It just right away, you can tell if it clearly fits your strategy, and also means being proactive to build relationships early. Long before a banker's SIM lands in your inbox. And that's how you can shape deals early instead of, like, overpaying in in auctions. Klint gonna expand on how cultural alignment often ignored until it's too late makes or breaks this pillar. Pillar two is unified process tools and data. If you're running diligence in spreadsheets and email, you're already behind. Viralad runs with a single source of truth. So really having unified tools, clean data, and structured workflows, that'll keep your teams aligned, enable them to collaborate, manage priorities, and track progress across the life cycle. Disorganized teams just move slower and sometimes lose deals. Pillar three, the synchronized diligence and integration. So most buyers will wait till a week or two before close to start planning integration, and that's how synergies evaporate and teams get frustrated. We don't have a real clear plan to execute on day one. So buyer led really flips that diligence integration run-in parallel. You're assessing cultural risk, aligning leadership, mapping day one readiness, like, as soon as you start the diligence process. And that's how you land smoothly and and stay ahead, after close. Pillar four, bill for scalability. If your m and a process breaks when deal volume doubles, that's not buyer led. You know, really making this scalable so that you can run current current transactions whether you're doing one deal or 10 deals without having to sacrifice quality. So right people, process, and tools give you the the leverage and and building that, ability to scale. And pillar five is win win approach. You know, this is where a lot of times, you you know, it's, the focus on just getting the deal to close. But the reality is is this is when the real work starts is that closed. So building this, a setup for both teams to align and and really get the most out of human capital, creating this this, leadership to to manage the teams and have this win win mindset, so that you got people, culture, brand, product, you know, things are really aligned to to come together. And and it's just like going more on the people side than the financial transaction. This is where Klint gonna dive into how strong people strategy drives this pillar, how you activate teams, align culture, and set the deal up for long term success, post close. With that, Klint, I'm gonna give it to you. Wonderful. Well, Keeson, thank you so much for inviting me again, and, I I just love this conversation. Right? I love the buyer led framework. I love being in the driver's seat about how how we're gonna do our deals. So really excited to share from, from my experience, and, let's just roll into it. So we've got roughly thirty to forty five minutes of conversation to have here kinda depending on what we see in the chat where people might want me to emphasize things. And I'm gonna try to leave some time for, questions and opinions at the end. I've moved away from q and a because if you've done m and a long enough, you know there are no answers, but there are a lot of opinions. So, I'm happy to do some questions and opinions at the end here. So let's, we're we're gonna cover a few things, you know, what buyers want, why we don't get it, and then how we can get more of it by really looking at our people strategies. So let's start off with with what we want as buyers, and this is really some research that DealRoom did a while back. You know, we've got a lot of different reasons why we do m and a, including business growth. And I did a little bit of digging, and a lot of the large PE firms are looking for a 25% IRR. I mean, if that's not growth, I don't know what is. Generating those revenue synergies, achieving the economies of scale, diversifying the portfolio, vertical integration, tax bennies, and and knowledge transfer. So we've got a lot of reasons that we do deals, and most of them have to do with, you know, furthering our strategy or furthering the finances of the buyer. But, unfortunately, we know that about 80% of deals don't meet their financial thesis, and those numbers haven't moved in a lot of years. So so why is that? Well, I I call it integration debt. You know, just like tech debt is how we communicate to our leaders that doing technical work poorly with bad source code or, you know, just not paying the attention we need to pay causes us to have tech debt. When we do m and a integrations, I think we incur integration debt. And two of the big causes of that are culture clash and leader misalignment. So what I'm going to do today is spend a lot of time really focused on these two areas, the culture clash and the leader misalignment, so that we can at least retire or mitigate some of those big causes of that integration debt early on starting with our diligence process. So let's, let's just kinda roll into, some of the big pieces of putting that people strategy together. So, obviously, we wanna start with the deal strategy. Right? The people strategy shouldn't be out on its own island. If you've been in HR for as long as I have, you you know that the people strategy has to work with the deal strategy and make sense. And since I see quite a few folks in people ops here, you know, this is our opportunity, to to step up and really start speaking the language of the business. What is the strategy? What are the expected returns? If you're a people leader who doesn't know how to read a financial statement, I strongly encourage you to go take some classes on on how to read those financial statements. There are some great one and two hour classes out there on how to do that, and I promise you that your friends in the corporate development and finance function will love it if you get yourself more financially literate. And then spend some time talking with those folks working on what is the strategy, what does this really mean as we move forward. And what we'll often find, or at least what I have often found, is that, sometimes the deal strategy does not start to contemplate the integration strategy. And that's our opportunity to start saying, hey. Right. We're gonna go buy this thing. How are we really gonna make it run? And those conversations that tie back into the deal strategy can make an enormous difference. Now I know we've got a mixed audience, and some of, some of you are really facile with the numbers, and some of the corp dev folks are doing a little cheer that I'm telling HR people to go read the the financial statements. So wherever you are, those are just good fundamentals. Once we've tied back into the deal strategy, we need to look at who's really driving the value creation. And at the end of the day, that is typically the acquired leaders in some form or permutation of partnership with the acquiring leaders, with the catching leaders. And one of the things that I see happen a lot that absolutely decimates deal value is you bring the law the wrong leader along. I was having a conversation with, a gentleman who is the human capital operating officer of a fairly good sized fund, and and we were talking a little bit about leadership diligence and leadership changeover. And he said that he has never had a conversation, with a partner where they regretted making necessary leadership changes quickly. Right? Usually, the regret is that they bring in the wrong leader, and then they take too long exiting that leader. And I think a lot of why we bring in the wrong leaders in a lot of deals is is we go by gut feel. And, look, gut feel is is great for some things. It is not a great thing if you're trying to 10 x a business once you've acquired it. Right? If you're trying to really integrate that business into your, your existing offerings and you've got the wrong leader, it's gonna stall things out. And and I imagine everybody on this webinar has had some form of of bad leadership integration come along, and it really starts with the assessment. And so when I talk about gut feel, what do I mean? I mean that you've done a bunch of dinners, you've done a bunch of lunches, and they are an absolutely great guy. Like, that's that's almost what I hear when I talk with, corp dev folks over the course of my career is, oh my gosh. So and so is just a great guy. Right? And I love working with great people. Do not get me wrong. A charismatic leader who can, you know, have a great conversation that's charming, easy to get along with, that is an absolutely fantastic characteristic. It does not deliver deal value. Seems like a good fit. Why do they seem like a good fit? And when I start to dig into that, there's a lot of bias that creeps into that process. Right? Our kids go to the same school. Right? We went to the same university. We know some of the same people. And, again, that's fantastic if we're talking about people that we can get along with, but it doesn't mean that that leader is going to be able to adapt to the new environment where they're going to be leading from and be successful. Right? So just because I like you does not mean that you're the right person to run this business in the future. Or if you are, it doesn't mean that you're coming in with all of the skills that you need to be able to thrive in the new environment. And that is often the x factor. Right? How do we get you the skills to now operate in a new environment? This gut feel is usually based on dinner and drinks. It's really about do I like you. And, unfortunately, what that does is it hides any kind of misalignment until after you've closed the deal, and then the real personality comes out. Right? If you think about it over dinner and drinks, these folks have literally millions and millions of reasons to be on their best behavior, right, to sell you that you wanna sell. I I remember not not at the leadership level, but, there was a deal that I did several years ago where we were doing our people diligence, asking questions about performance, and everybody was a superstar. Right? We only hire rock stars. The entire team is a players. We closed, and and they didn't even wait for the next day. It was the day of close. We'd cut all these people over to the payroll of the company I was with at the time, and their CEO comes to me and says, okay, Klint. I need to put about a third of the workforce on improvement plans because they're just not doing their jobs. I'm like, wait a minute. Six weeks ago, you only hired rock stars. You only hired eight players. What what happened in the last six weeks that I need to put a third of your workforce on a pip? And, you know, it it's not like something changed. It's just that when he was selling his business, he was looking through those rose colored glasses, what we wanted to know, what we wanted to hear about. We did not pit 30% of the workforce, by the way. We we worked on some other ways to get those folks performing that that worked out. But that misalignment that happens because we're doing things on a gut feel basis can really tank deals. Also, if you happen to get sued, I'm an HR guy. I'm always thinking about lawsuits. Those gut feels are not particularly defensible in court. It does reinforce those biases, that halo effect, like, you're a great person. I think you're a great person. You're like me, and so, therefore, you're also a great person. And at the end of the day, it really makes it so that value realization is delayed. Instead, I really think the best way to do leadership diligence, and this really ties into that first pillar where you're you're not doing it on impulse. Right? The gut feel is an impulse. It's not scientifically backed. It's not something that we can stand on. Now we should trust our guts. Right? There's an important reason that we operate on gut feel in a lot of cases, but let's back that up with something a little bit more structured. And as a IO psychologist, I am a really big fan of structured assessments. But there are other ways to do that. We can observe what goes on with that person in the real world. Right? People are on their best behavior when they're trying to sell their company. I remember sitting in a diligence meeting once, and, the founder snapped at one of his team in a way that I was like, holy cow. This guy's kind of a jerk underneath. And we overlooked it, and it turns out he was a jerk most of the time. So in that real world condition where we were just watching his behavior, we could tell that there were probably going to be some challenges with this leader, but we ignored it because that gut feel early on was what a nice guy. Validated psychometrics. So, for those of you that that have worked in leadership assessment, I see a lot of uses of, like, the Hogan assessment or other psychometrics that are out there. There's a lot of firms that offer these up. And when I've done psychometrics, I've often ended up with more insight, not necessarily as a go, no go on the deal, but with does this person have the skill and personality that we need to, have them stick around in the long term, or are they going to be a three month person? Right? Are they really only going to be here for a short time to transition things because they're not going to thrive in the new environment? And we should really know that during diligence, and, I'll I'll get on my soapbox for a moment. A lot of times when we see retentions for a certain period of time put into the LOI, right, if you find out that that person is not a good fit and you will only need them for three, six, twelve months to transition the business over, you probably don't want four years of retention in the LOI. So that might be an opportunity to hold off on offering certain amounts of retention if you can do it. Right? I know that you've gotta negotiate a lot of points. But sometimes these psychometrics can be really, really helpful for determining, is this person a short term person? Are they a long term person? When we do it structured, it's scalable. Right? So I don't necessarily have to only deploy to the top two or three people. I can actually deploy, depending on the size of the deal, a scalable assessment down to, you know, a senior director level and try to understand what's happening with the broader workforce. Are there areas where I'm going to need to do more work to integrate this business? Is it gonna be successful standalone? Another thing that I like about structured assessments is where those gut feels are almost all about personality. With a structured assessment, we can actually look at true culture fit if the seller and the buyer both understand their cultures, but assessment's a good way to get at that. And we're also looking at cognitive ability, not just native intelligence, but also things like adaptability and the ability to work through change, which is critically important during an m and a situation. And if you do that pre close, then you can look for those derailleurs and those risks pre close. Right? You're not playing catch up later. You're planning intentionally. It also supports retention, succession, and org design. It's objective. It's repeatable. You can do it again and again, and it ultimately accelerates your outcomes. So, let me just give you a real life example of a very simple piece of structured assessment, that I've done in the past. I was with, one of my prior employers, and one of the things that, I had us do was a social media scan of all of the founders that we were we were bringing in. So we would literally go out to their, LinkedIn, their Facebook, their Instagram. We would look for mentions of them in the media. We would, if they didn't done podcast appearances. Right? If they've been in the news, we would look at their public facing persona. And in one of these situations, we were buying a company that manufactured, insecticides in a market that we wanted access to, and that that was the deal thesis. We wanted this, this brand. We wanted this manufacturing capability. And when we did this guy's social media search, it turns out that what he really wanted to do was go roast coffee. Right? He had inherited the insecticide business from his dad. His real passion and everything on his Instagram was about coffee and, and him planking shirtless in Ibiza while DJing, which I mean, if that's not the life, I don't know what is. But but that was his whole social media presence was coffee and, planking and DJing. And there's there's no shame in that. It's just clear that he didn't wanna run an insecticide business. And so I went to our our head of corporate development. I said, hey. I think we're gonna have this guy for six months at the most. And, ultimately, you know, we decided to go through the deal. That should not have been a deal blocker, but we were able to plan for this person's exit. And sure enough, six months rolls around, and he's like, hey. I wanna go plank and DJ. I really don't wanna do this insecticide thing anymore. We had not set up as robust a succession as I would have liked to be completely candid, but at least we knew this was coming, and we'd identified somebody in that business who was likely to be able to take over. And we were able to very quickly exit him and minimize the business disruption because we were not surprised that his real passion was running this coffee business. So that didn't have anything to do with psychometrics, but it had to do with a really structured look and thorough leadership diligence. So, hopefully, that's a that's a helpful way of looking at this. Then the next thing that we really want to do when we bring that leadership team in is we wanna reset and realign them. And so for the past couple of years, I've been working with a really good friend of mine, Ned Eustace. Ned and I connected back when I was at Boeing and he was at IBM, and both of us have this passion about having leaders be super successful when they come in from deals. And so Ned and I have been thinking about this leadership value chain for quite a while. And what we realized fairly early on is that we spend a lot of time talking about retaining leaders. Right? We think about that at the point of the LOI. We usually have a dollar value in there, at least a lot of the deals I've seen. And, again, I really I really encourage you to take that out because I think a lot of times we're spending money we don't have to. If my, planking coffee guy, for example, had a four year retention, we were likely to pay that four year retention when he exited even when he left in six months. But it wasn't about retaining him. It was about resetting and realigning him. Right? He wanted to do something else. We wanted him to run this insecticide business. And so had we had longer term, a longer time with him, we would have worked through these stages. So we want to do that awareness stage. Like, what's going on with this deal? What does the visibility look like? We need to orient them to the new strategy. Right? Because often when we're buying, the strategy is not staying exactly the same. Now now in some cases, yeah. Right? If you're just gonna hold it, not do anything with it, maybe you don't need that particular reset. Maybe you just need the awareness and the commitment resets. But a lot of times, we are reorienting these businesses and their leaders as we integrate them. And so that next piece of the value chain is orienting them to the new ways of working and acculturating them. And by the way, they're bringing their entire team along with them in this step. And then next, you want the commitment. And you'll notice that that we're saying commitment, not retention. Right? So retention means that I've got your butt in your chair. Commitment means that you're actively working towards the deal thesis. Then we're executing. And then finally, there's accountability. Did we do it or not? And, unfortunately, I think a lot of the time, we try to drive directly to execution and accountability without these other steps in this value chain. And you can see up from the bottom, we ran some numbers in a a deal of, a particular size and said, you know, what's at risk from things like churn at the very basic level? Right? Because there's replacement costs of losing employees. There's almost always a productivity dip when we change things over, and those are expensive. That's that's why I started calling it integration debt. There is a cost to these things not going well. All the way up to missed opportunities or, candidly, I've been around the block long enough that I've done acquisitions, that I've then turned around and sold. It's kind of one of the jokes in corporate m and a is, hey, who gets the divestment? Well, who who bought them? You get to sell them. Right? And often, when we turn around and sell them, we're selling them at a loss. And that loss is happening because these steps along the value chain are not happening. This is a real passion area of mine. I could spend hours talking about this. But in the interest of time, I'm gonna move on. But if anybody wants to engage with the conversation about what it really takes to bring leaders along this journey, give me a call. I'm a geek. I love talking about this kind of stuff. But let's move on now and talk about, the other piece, which is our cultural diligence. And like Klint mentioned, I really think that this is an upfront piece. You know, it ties into that pillar one. You don't wanna do this on impulse. You wanna at least understand what you're buying. And I really think this ties into pillar three, which is around synchronizing your diligence and integration. Because as you're learning about the culture, you're also trying to figure out what you're going to do in integration. I also think in a lot of ways, this is part of a unified process, because we capture a lot of this information in different places. So, what I have up here that you're looking at are opportunities for cultural diligence. And because I'm a little bit of a geek, I separate cultural diligence from cultural assessment. I when I say cultural diligence, I literally mean what are you doing in the preannounced due diligence phase to understand the culture of the company that you're acquiring, versus cultural assessment, which is when you get access to that employee population and you can talk to them about their lived experience in that culture. Right? So this is cultural diligence, not cultural assessment. Cultural, diligence, I believe, very strongly should happen before you close. And there are a lot of ways to get a cultural diligence. I teach HRM and A at NYU, and I have my students do cultural diligence. I have them pick two public companies. I have them make up a reason why those companies would wanna do some sort of acquisition. And then I literally have them go out with as much information as possible just from public information and do cultural diligence. And they they turn up with some really good stuff. We've started using AI in that process, to do a lot of the scrapes for us. But, anyway, start with public information. What's out there about the founder, about the company? What are they saying on their website? What are they saying in their own press releases? What does the news have to say about them? Then we move into expert opinions. So there are a lot of analysts out there who have a lot of information on companies. Every industry seems to have some sort of repository with a lot of competitive intelligence in it. And so those expert opinions are a really great source of information for your cultural diligence. What's in the sim? Like, what are they telling us about themselves? How they perceive themselves is a really, really big driver of their culture. And, again, just like in the, the lunches, they're on their best behavior. In the sim, you're gonna see the best parts of that culture come forward. So take advantage of it. What are the best parts of that culture that we need to know about that we can leverage for our people strategy? And then as we learn more, obviously, we'll refine. In the VDR, the VDR is obviously a very rich place. From an HR perspective, I'm gonna look at the handbooks. Right? I'm going to look at the policies. I'm going to look at how they manage talent. If they put employee engagement surveys in there, I'm going to look at those things. So the VDR is a really rich resource of cultural information. Interviews. So during my diligence interviews, I ask very specific cultural questions so that I can understand how they see themselves, how they do things like performance management, how do they reward people, how do they promote people, like, what are the behaviors that that company really wants to incentivize? And I learned that usually through the interview process. Site visits. Now, I know that we're doing a lot of this over Zoom these days, but the site visits are pure gold. And, because I can't always get out on the site visit, I deputize my friends in corp dev. And I asked them to please take a look around. I've got a checklist that I use that I like to give them, so that they can jot down their impressions. And it is so helpful to have that partnership so that I understand what's going on on-site if I can't make it out personally. And then the last piece is what I call the post diligence huddle. And that's when we're all coming together to talk about what our due diligence findings are. And I'm gonna ask a couple of key questions during that huddle from an HR perspective. So the first question that I'm asking from an HR perspective is, what are we gonna break in this culture when we integrate them? Right? There's probably a fancier way that I'll put it sometimes, like, you know, what are the value drivers that we're going to maximize when we bring them over. Right? But but at the end of the day, I wanna know what are we gonna break, and what's going to be awesome that we can build on, from that huddle. So one example that I use is, it's not even an HR example, but it's the value of of understanding the, the value of that huddle. I was with a a company that, we were buying a small manufacturer of drones. And the way that their team would do rapid prototyping of the drones is they'd figure out what they wanna build, and they would go over to NAPA Auto Parts, and they would order them on their personal card. Well, then they get bought by a government contractor. That doesn't work anymore. So everything has to be in the parts catalog. Right? And then, once it gets ordered through the parts catalog, which takes takes a couple months to get added to, by the way, then, once it gets received, it's gotta go through a a quality check to make sure that it actually works and is in spec. And then, after that clears, there's a couple of other things that you gotta do before you finally get your part. So the rapid prototyping that used to take a couple of days now takes a couple of months because of that change. And we learned about that during the huddle, and we had to figure out how are we gonna work around that policy. Not a lot of human capital implications other than I had to figure out how to occupy a couple of board engineers for a few months because they couldn't do their rapid prototyping. But that's an important thing to understand that just came out of that huddle, and I was asking the question what breaks so we could mitigate it. The other thing that I ask is, who's the talent that we need to retain? And I learned this one the hard way. So I was doing my very first deal with the training wheels off. And, I I remember that the deal didn't get signed, so we pulled all these poor people into a ballroom on a Friday afternoon. They knew something was going on, but because the deal hadn't been signed due to some legality, I didn't even remember what it was. We had to send all these people home with, like, well, come back to this giant ballroom where something's happening at nine in the morning, which they all knew that an acquisition was imminent. They weren't idiots, you know, but we couldn't officially tell them. So they come back the next morning, and, we we have the rah rah talk. They all look excited. They're glad that their overnight wasn't a mass layoff. And I'm in the hotel bar grabbing a beer, and somebody walks up to me and goes, hey. We we have an emergency. The person that wrote all of the source code is pissed that he didn't get a retention offer. And and my feeling of pride, my celebratory beer was suddenly tasting very, very bitter because that was my job to spot. Right? I was the HR guy. I should have known this. So, we we cleaned up the situation pretty quickly, got him a retention offer so that he felt valued, and I called up my m and a best friend. And I encourage everybody on the call, please make an m and a best friend so when something goes wonky, you can pick up the phone and call them or text them or however you communicate these days. And she said, you know what? I've had that happen before, and what I've learned is that that just becomes part of our diligence process. So I added that question to the huddle, who are the people that we need to retain as part of this deal? So, a couple bonus tips about the huddle. But that cultural question is a really, really important piece of this cultural due diligence. And then when we're doing the diligence, we wanna focus on what I call the five key drivers of culture clash. And this is based on some research that I'd done, talking to a lot of folks that had been around the block, plus my own experience. And what we realize is that, you know, part of why we don't do cultural diligence is that we're we're trying to boil the ocean. So I apologize for that hackneyed phrase, but right, it's a big job. We're trying to do a lot, and we're we're making this word culture carry a lot of water. And, Emma, I am happy to be your m and a best friend, by the way. So I'm an open networker on LinkedIn. Come find me. I like having a lot of m and a best friends. So so just just, you know, call me. So what we realized is that culture was too big of a word. Right? It encompasses everything. And even when we boil culture down, you know, everybody has a slightly different definition. My definition of workplace culture is how people get things done in the workplace. Right? It's pretty simple definition. But what really matters in m and a, we have come down to to five different things. So the first is what I'll call operational expectations. Right? What does it look like to operate effectively at this company? What are we delivering? What are the things that we're accountable for doing? And how do we do that? Right? So what rings the cash register, and what gets rewarded as we try to ring the cash register? Clearly an important part of culture. The second pillar is decision making. How are decisions made? Are they gut field based? Are they based on data? Are they centralized groups? Or is responsibility distributed? Do you have to be a certain level? Or can I make decisions at the ground level? So all of these different ways of decision making are very important parts of culture. And this is probably where, I see the most conflict with leaders coming over into m and a. The number of times I've had a leader come to me and say, hey, Klint. You know, yesterday, I could write a multimillion dollar check, and nobody would question me. Today, I'm not allowed to make my own hiring decisions without somebody, you know, two levels above me signing off on it. What the heck? Usually, it's stronger words than what the heck, but that sentiment is absolutely there. So, that decision making, understanding how that's going to change, and preparing those leaders for that change can be absolutely critical to driving deal value because you're not mired down in resentment over the fact that people can't make the decisions they used to make. Organizational self-concept, this is about how the organization sees itself. And a lot of times, where I see this happen is when a big company buys another company. Right? I've worked for companies that that I say they turn like battleships. You know? It takes a mile and a half of runway, and it's a very slow pivot. Smaller companies are not burdened down the same way. And there's a lot of good reasons for big companies to move more slowly. Right? The risk profile is usually higher. The chances of them getting sued are a lot higher. You know, and they're affecting a lot more people at scale than smaller companies. There's a lot of good reasons that they're slower and and less adaptable, but that doesn't change the fact that it's a conflict. Right? If you're used to decisions being made right away and implemented right away, and you see yourself as this agile company, and suddenly you're not, that can mess with your head in some pretty big ways. The other place that I see this coming up, and I can't remember who told me this story, but is in firms that that have, like, a a mission driven feel, and then they're bought by a big company with a profit motive. So I was, talking with one of my m and a best friends, who was telling me the story of a company that had an environmental mission. Right? They were going to, reduce emissions through their, through their technology, help people be better users of their electricity and what they take up on the grid. And they were bought by a company where the, founder of the acquirer had made several very prominent political donations and stumped for somebody who had a different set of values. And they lost a ton of staff because that self-concept was so very different where you had this sort of eco driven, ethos for the for the seller that just didn't exist at the buyer. So knowing that that conflict exists is very important. Next, how do teams collaborate? Right? Are they getting together in person? And this is a big deal right now with all of the return to office going on. Right? So so, some companies are remote first. Other companies are, I need your butt in this chair five days a week. And by the way, badging in and turning around and leaving is not okay. I want your butt in that chair from 8AM to 5PM. Thank you very much. Just one example of where team collaboration creates a lot of conflicts. If you've got different ways of looking at that, it's important to know. It's also things like, tools, collaboration tools. You know, a lot of people assume that smaller companies are more agile, and I used to believe that too until I until I started doing m and a at smaller companies. If you wanna watch a small company freak out, you take away their Slack. I was with a company that didn't have Slack, didn't want Slack. They were using this was obviously quite a while back. They were using a modified version of ICU, which if you're as old as I am, I remember when ICU was a cool thing. Half of you are like, what in the world is ICU? Think about, text messaging over the Internet in, like, it it's like Mario Brothers level technology. Right? This is old tech. And we were taking people's slack away and making them use this this, ICU with a facelift. It was terrible. Absolutely terrible. And I learned very quickly that small companies are not necessarily agile. They like to think of themselves as agile, but you take a tool away that they rely on, and you see that agility breakdown. And it was also terrible for productivity. Right? They were fighting this, communication changeover for months. And and I don't mean they were arguing with it, but they were inventing workarounds and ways of doing business that were absolutely unnecessary. We should have just let them keep their Slack licenses quite candidly. Another good example of this, and this is one of my pet peeves when big companies come in and buy small companies, I did a deal a few years ago where where company paid lunch was a perk. So lunch was brought in every day. And what happened, because lunch was brought in, two things happened. One, is people sat down over lunch and they problem solved. That's how they did their problem solving. So the product people, the developers, customer success, and sales, they were all friends in the office, and they would sit down and problem solve over lunch. That was how they collaborated as a team. It also had the secondary benefit of of now, I I don't mean to paint all developers with broad brushstrokes, but there's a bit of a reputation that they wanna roll in at eleven. Right? And they wanna go home at nine or ten. So what would happen is the developers would eat the leftovers for dinner. Right? So, you got a lot of extra hours because people were staying past six or seven till eight, nine, ten at night because they were fed. Well, we took their lunch away. The collaboration went down. We also lost a lot of productive hours because people were like, hey. If I gotta leave at six to go feed myself, I ain't I ain't coming back. So that that way of team collaboration, knowing how that's gonna be affected by your change is really important. And then finally, communication style. So where I often see this is in levels of formality. Big companies like to communicate things very, very formally, very, very structured. You know, at Walmart, there are times when I can't send a message out without running it through attorneys first. And, again, very understandable. Our risk profile is very different than other companies. Smaller companies tend to have different kinds of communication styles. They tend to be a little bit more decentralized. It tends to be a little bit more network. And so understanding how messages get sent through that organization can be a very, very important way of limiting your culture clash. And then there's a few other things that I I talk about, in my book, or I'm happy to talk with folks offline. So now that you understand your leadership and you understand your culture, how do you really drive value? And I know that this is a really shallow slide. We could do a webinar on each of these phases, and, unfortunately, time doesn't allow for it. But really quickly, here's your simple steps. Right? First, you wanna activate the workforce. And and I really do mean activate the workforce. I don't mean retain the workforce. Just like we talked about with the leaders needing reset points, the workforce needs these reset points. I call it rerecruiting because, you know, being invited to sign an offer letter when you've been acquired is a lot like being invited to pull over to the side of the road by the guy with the flashing lights behind you. You can say no. Saying no is an option. It's usually not the best option and the consequences are usually pretty dire. So people are signing their offer letters. Do not believe for an instant that you have retained or activated them. There's a whole rerecruiting process that needs to happen to really bring these people along. You know, they're changing jobs already. Why not go look for a job out on the market is what a lot of folks are thinking. So you need to get in early and really activate that workforce and reset them for what's next. Second, you need to lead the change. And I really believe this is the buyer's responsibility to be the leaders of the change. Now you want to enroll and enlist the leaders that are coming over. They're the people that are gonna be respected. They're your trusted messengers, but they don't know what the change is going to be. They've never worked in your culture. They don't understand what your operational expectations are. They don't understand how your reward systems work. So the buyer needs to lead the change, have a change plan in place so that that acquired leader can do their job and bring that workforce along to deliver the value. Step three, once you're in the middle of your change is to listen intentionally. And there's a lot of ways to do that. There's focus groups. There's pulse surveys. There's really just some passive listening that's out there. There's some really exciting technology coming out with AI that can allow you to more passively listen. But whatever method you choose I'm a big fan of pulse surveys, by the way. Super easy. You can text them. People get them on their phone. Right? Fill them out quickly. And you want to make sure that you know that you're listening by closing the loop. So if I do a 10 question pulse survey, I'm gonna leave it open for a week. And then a week later, I'm actually going to share the results. And it probably isn't me as the HR guy. It's probably one of the leadership team. But if I gotta do it, I'm fine doing it. And the way that I wanna deliver the we're listening to you message is a simple two column format. On the left hand side, it's what you said, and on the right hand side well, I guess, for you, you're probably gonna be mirrored. On the left hand side, it's what you said, and on the right hand side, it's what are we doing. Right? And sometimes, it's a a lot of people will be like, we really wish you hadn't acquired us. Right? So I'm actually gonna put what you said is that you're nervous about the acquisition. And on the right hand side, it's gonna be we're working with you to try and make this as smooth as possible. You know? Or other times, it's going to be, like, I wish we could keep our old medical plan. Like, we heard you, and we're gonna share more information about the new plan because that's not an option. So sometimes people are gonna ask for things that you can't do, but you wanna at least let them know what you can do because there's a concern that they're sharing for a reason. And by you actively listening and then communicating back that you've heard them, you win a lot of goodwill. Next, we're gonna track the results. What are the KPIs? How are things coming along? And then we're going to adapt with purpose when things aren't going the way that we want them to because of what we see on the results. Again, we could make a whole webinar about each of these, but, but now this is just a basic framework for using your workforce to drive that value delivery. And then a shameless plug, Keeson mentioned the summit in Boston. I'm really excited. M and A Science has been one of our sponsors for literally years. You can either use that QR code or come to People's Energy Summit. It's online, so just come join us online. Or, hey, if you're in Boston, let me or Keeson know, and and we'll get you a guest pass to come join us in Boston if you're in the area. So, with that, Keeson, I think it's back to you for wrap up. Alright. Q and a time, my friend. I, hope we got some people fired up to ask you some questions. You covered a lot of great material and, found it really fascinating, some good stuff that I picked up. So let's see what we got here. Alright. Klint, I would love to discuss with people what's their IRL in real life questions are for things like this. Would you be interested in knowledge sharing? Okay. Oh, yeah. Yeah. So it sounds like a a discussion. Like, I'm always happy to host a discussion. That's, you know, Keeson, I know that you've got some formats where you do that as well. Yeah. I think that's the one too. Like, we may have to do that, like, more we do like those round table discussions. So I I think it'd be great because we're actually lining up more theme focus. So that's one thing we should pick up of doing one that's even more on this sort of people focus. It's like a round table discussion and get more opportunity for the I'd say it's really fun where you just don't have either the prepackaged content. It's just purely participants bringing up the the topics and and debating them out. I like so I like the debates. I always try to encourage debates. Yeah. Yeah. Share the QR code one more time. I didn't quite catch it. Oh, sorry. I'll go back to that slide. Oh. I'm sorry. You know, I see something in the chat here that says how to motivate RH leaders to dive into cultural diligence and assessments when prepping for a deal. You know, I'll be honest. My oh oh, HR leaders. No worries. I wasn't sure what an RH was, but I was gonna run with it. So look, I I think it's a great question about how do we motivate leaders in general to get the importance of culture. Right? So I think there's a there's a couple of things. I'm a I'm a data guy. There was a study by McKinsey during the pandemic, like, late pandemic twenty twenty three, I wanna say, where they had gone back and done some looking at synergy capture as a result of cultural assessment. So, or not cultural assessment. I'm sorry, paying attention to culture. So, I don't remember the exact numbers, but but those acquirers that paid attention to culture were far more likely to achieve deal synergies than those acquirers that did not. And so I point back to that. Like, there's actually research that says when you pay attention to culture, you get better return on your investment from the deal. So that's almost always my starting point. And then the second is that, you know, look, sometimes we as human beings don't listen so well. I know that I am very guilty of that on occasion. And sometimes we gotta stub our toes. Right? We gotta make a mistake before we realize that maybe we should do it differently. So I really don't like to be an I told you so guy, but sometimes a very gently worded, like, hey, you remember when we didn't do an assessment on that last deal? Or even, like, an internal change initiative. Like, we didn't really look at what's going on in this little group that we're asking to do something different, maybe let's not do that again. Maybe let's learn a little bit more so that we can shape our messaging to get better results. So I I think that's how I usually take a run at this. And and look, the reality is that I get told on occasion that, hey, your cultural assessment is a distraction from what we're doing. And I'm like, okay. No problem. Then I don't call it culture assessment, by the way. Once I get told that cultural assessment is, is not something we're gonna do, I then switch language to do I often call it, integration readiness or workforce readiness. Like, it's the same thing. It's are we ready to execute on this through the people? And so I'll just take the word culture out of my vocabulary if there's a leader who doesn't wanna hear the word culture. And I'll just call it some kind of readiness depending on the culture of the organization that I'm sitting in. So I I remember I once had a leader ask me, hey, Klint. Can you pour me a cup of culture? And I was a little bit younger in my career. These days, if I get something like that, I'm like, absolutely. If you can pour me a cup of p and l. Let's see what else we got. Do you have a session similar to this focus on divestitures? No. But that's a good suggestion. So we'll we'll take that one as a suggestion. On the cultural diligence side, we do employ that tactic of who are the people we need to retain, but then realize during integration phase, found key players that make the business work. What other tactics do you have to find those key players that might be more hidden? Yeah. It's a great question. You know, I think it, one lever to do this is most firms will do some version of, job mapping and alignment. If if you've got a, a structure for your jobs, there's probably a process that you'll go through where you're mapping people to the jobs. And I often find when I'm doing that with leaders, that's a great opportunity to talk talent. Now, I've been with firms like at Walmart. We give offers on the day of announce. Right? So people know what their job offer is. And and doing it that quickly, it it does compress this time to do some of that mapping and alignment, but we do try to understand who the key talent is during that that process. When I was with Oracle, we would close the deal and then do the mapping after close, and that allowed us a little bit more time for a deep dive and observations before we changed them over. And so but but whenever you do that, I really encourage you to use that mapping and alignment process if you have one to start having these conversations. The other thing, if you don't have a mapping and alignment process, is, during diligence, I find it super helpful, to go through the org chart really box by box. And I usually will set up a separate diligence conversation just for organization and talent separate from HR risks. Right? Because in my mind, that's a different value driver for operating the business versus more traditional HR diligence where I just wanna make sure your plans are compliant and you're not gonna end up giving me a bunch of fines that I'm gonna have to pay off and inherit or, you you know, I kinda wanna know about your harassment lawsuits, right, which are a different animal from the the talent and organization calls. So, hopefully, one of those will work for you. The other thing that I I have not done this, but I've had colleagues that have done this, is there are actually firms that work with recruiters that do, like, workforce research, and they will actually it's amazing. I saw a report from one of them. But they'll actually build out the org chart based on a couple of different ways of gathering information, and they have some ways of finding out who some of those key players are. And then next, let me just throw one more thing out there. We're starting to see more passive ways of using data to identify talent. One of the the ways of doing that is by simply doing some what we call organization network analysis or ONA. You can do that with things like email metadata, or you can do a survey, but the email metadata is much, much easier. And candidly, self report surveys always have problems. But the idea is to find out who are your connectors in the company. So, you know, you'll find some things with organization network analysis. Like, maybe it's not actually the sales leader who's driving the sales business. Everybody's really going to, you know, a guy who's one layer down in the organization, who's just been in the trenches and knows how it works. But maybe not a great sales manager. Right? Because not every great salesperson is a great manager. Stick with your strengths. But then you might wanna actually retain that person more than the sales leader. So I I've seen that kind of situation come up. And with AI, I think we are starting to see a lot more technology. I've had a couple of conversations with two different firms in the last month that are using passive data to help identify talent. And I think there are some due diligence implications. If you can get in that deep during diligence. I really think that that's more of a delayed discovery type of thing after you close where you can deploy that kind of technology. But it's never too late to extend an offer. Right? So even if you're three, six months in and you identify somebody who's a key player that you don't wanna have go, take a run at it. Give them a retention bonus. Right? Yep. Awesome. I I know I got more questions. But before we dive into more questions, I wanna share a little bit about our next session. We've officially hosted 10 master classes, each one with hundreds of registrants and attendees. I know I've learned a lot, so I hope you are as well. To celebrate 10 sessions, my team has convinced me to flip the script. So for our eleventh episode, I'll go from host to guest speaker. Our COO and president, Greg Lord, will join as the host, and I'll be in the hot seat of the guest speaker. In this session, I'm gonna walk through the BioLit m and a framework. But we're gonna walk through from the the the life cycle, and really look for some, you know, candid insights, some practical takeaways, to lay the groundwork for adopting this approach. So you can also scan this QR code to sign us up to sign up for the next master class session. And, I'll get back to more questions here. So are there, key questions, Klint, that you asked to identify, the, you know, sort of, like, key people in the organization? Yeah. So, I I do a couple of things. I will ask questions, and sometimes it really is just asking during the diligence call, who are the most important players? It might look like, who couldn't you live without? Right? If who, if they left, would cause the the most pain on your side? Right? There's a couple of different ways to get at just asking that question, which can be really telling. I also think it's really helpful if the target has provided things like performance data, like, what are the performance metrics that folks have. I also usually have a couple of years of, like, bonus data if the company has an incentive program. I'll usually ask for three years of of bonus data if they've been around that long, and I'll notice trends in the bonus data. So if somebody's getting rewarded more than others, so I I think there's a couple of different ways to get at who's critical. And again, like I said, I I think that they're we're starting to get more technology tools out there that'll help us identify that using other kinds of information. Cool. Let's try this question. We're limiting we are limited in our engagement with that with the acquisition. We have bought 51 companies so far, and never have we been allowed to visit or speak with them in due diligence. Only after the deal is completed. How can you mitigate against this risk in relation to cultural assessment, or is it that you just have to accept it and analyze through those public opinions, Glassdoor, Reviews, website, etcetera? Yeah. I think that's where you've gotta start. It's it's actually pretty common not to have access to the employees until after close. And even in situations where we've had a really friendly seller, because I've worked for large corporations that are risk adverse, we haven't been able to get in and talk to, the employees until after the deal is closed. So I think beforehand, you you just have to deal with what's out in the information ecosystem and then very quickly pivot to that additional information gathering, before you make other changes. And and that's where that employee listening feedback loop can be really helpful, working a more formal cultural assessment into that listening loop, and letting people know, hey. We want this to be as smooth as possible. We're just getting to know you. Tell us. Tell us. You know? What can we do to make this better? What can we do to make your lives easier? What can we do to further the strategy? And people will be really upfront with their opinions, I've learned. And 51, that's great. And I'm really sorry that you haven't been able to get in and talk to them. I'll show you one or two more in. What type of items are on the checklist for on-site visits? Is it mostly culture based as well? Yeah. I mean, it's so it's things from, you know, just kind of noticing the approach into the building, right, can tell you a lot about the company and how they see themselves. How are you greeted at the front desk? Are how are the cubes or desks or offices situated so that, you know, how is the physical working space arranged for people to be there? How are the, what's on the walls? Right? What's promoted there? So there's just these visual cues. And, you know, working for Walmart. Right? You walk into a Walmart store, you have a certain experience. You have a different experience walking into Bloomingdale's. Right? And so the space communicates important things about the culture, and I think, it behooves us to look at those. I think in my due diligence book, I may have a walk through of how to do that. If I don't, I have a one pager buried somewhere. So if whoever asked that wants to just message me on LinkedIn, I'll shoot over my one page walk through on how to do, site visits. Alright. Wrap it up. Last question. You mentioned leadership diligence. In your experience, which matters more, structured assessment or gut feel? Oh my god. Structured assessment all day every day. Yeah. Right. How many first dates have you been on where you were head over heels in love, and then by date three, you can't stand that person? Right? I mean, maybe it's just me. Maybe it's just me. But I hear that enough. Gutfeld could shake you after time, Klint. Right? Exactly. Exactly. Yeah. Alright. This has been great. I really can't thank you enough for taking the time. It's honored to get not only somebody I highly respect in the industry, but a a friend. So, looking forward to it. I'm looking forward to participating at your conference coming up in September in Boston. And those of you who joined us, like to thank you as well. Really appreciate your attendance and, keeping us motivated to keep doing this series. So next time Good stuff. Thanks for having me, Houston. And I'm looking forward to your your session. I'm I wanna see you in the hot seat. We'll see. I I gotta I don't know. After this, I don't know. I gotta rethink it. Alright. Thanks so much.