fbpx

Deal Makers Interview Series: Judd Appel

Deal Makers Interview Series: Judd Appel

In the Deal Makers Series, we interview leaders, experts, and innovators in the Merger & Acquisition and the Private Equity space about how they get successful deals done. The series highlights perspectives of investors, corporate development executives, and buy and sell-side advisors working across industries and geographies.

We interviewed Judd Appel, Director of the M&A and Capital Raising practice at BayBridge Capital Advisors, an affiliate of Berkowitz Pollack Brant (BPB) Advisors + CPAs.

What is your current role, and can you tell us a little of how you got there?

I’m the Director of BayBridge Capital Advisors, advising clients on buy-side and sell-side mergers & acquisitions (M&A) transactions. I also raise debt and equity capital for clients, and try to find the unique solutions that our clients need.

I began my career as a CPA with Berkowitz Pollack Brant, left for 20 years to work for KPMG (Transaction Advisory Services), General Electric Company, Honeywell International, ITT Corporation, and Global Infrastructure Partners, and then returned to run the BayBridge Capital Advisors arm of BPB. I truly believe we have a great growth platform here.

Tell us about a typical client for BayBridge? What does working with them consist of?

We work with a broad array of industries covering most everything except probably oil and gas.

Our typical client and professional sweet spot are small cap clients with EBITDA of $3-25M. While our average deals are in this range, we sold a $1.2B auto dealership business last year. We work on a success fee structure so clients pay us when we succeed. We are very selective about the clients we choose to work with and conscious about what we bring to market.

Given that the majority of our clients are first time sellers, we invest a lot of time supporting the client throughout the selling process. Often, these are family-owned businesses. Recent examples include a $10M company owned by three members of a family, and a husband and wife that were running the $1.2B auto dealership group.

This work is very different than the work I did at General Electric and Honeywell where we were experienced buyers and largely dealing with experienced sellers. Since we work with smaller companies at BPB, our deals tend to have a more personal impact on the seller and require much more “hand-holding”.

You’ve worked on a variety of deals and acquisitions. What are some of the factors that you think contribute to a successful merger or acquisition?

The most important factor is to find the right buyer who is aligned with the goals of the seller, be it a strategic or financial driven transaction. Most of our clients want to find a good home for their companies, meaning they want the buyer to invest in and grow their businesses. No one desires to sell to a buyer who will cut costs and resell the business within a year and half to three years later. We spend the time and effort to find buyers who will continue to nurture the business and make the investment for growth.

Another important factor affecting the valuation and success of a deal is continuity of leadership. Buyers tend to want the former owners to stay on for a period to preserve relationships and provide interim stability for specialized businesses. This is a major point of negotiation since some sellers are tired and want to just walk away. That usually doesn’t work well in terms of valuation and success.

Are there any common lessons or themes you’ve seen in deals that are not successful?

It’s imperative to focus on people as they are the most important aspect of every business. If the workforce doesn’t like the new owners, value disintegrates quickly.

Our ability to go beyond the numbers for organizational compatibility and provide a high level of confidential support to our sellers differentiates us from the big investment banks. 

How often do these problems become clear before the transaction is complete versus once the deal is done?

The people problems usually become clear after the transaction is complete. We try to be proactive regarding this issue since interpersonal relationships of all sorts are often key to financial success. 

Often, organizations start to address cultural issues only when there is a problem. In an ideal scenario, when would leadership and culture come into play for an M&A deal?

Cultural issues must be dealt with on day one of the process. I am not saying it’s impossible for a multi-billion company to be successful with the acquisition of a $15M business, but you will obviously see and feel many cultural differences between large corporations and small entrepreneurial companies. In nearly all cases, the right transition period and predecessor management involvement is required over the first year. 

What is the value of integrating leadership and culture into due diligence? How does this look in practice?

Most of our clients employ a local workforce. The seller wants to know what will happen to their employees. They are not looking for a buyer who will cut a large percentage of the workforce. If buyers are looking for a firm that will integrate, they try to be open and minimize unexpected issues.

It’s my role to give guidance to the seller as their banker. I’ve been in this arena for 25 years. I’ve learned a lot from seeing many successful transactions and of course those unsuccessful ones. As one would always say “the best way to learn is to make a mistake” and learn from it.

Have you ever seen leadership and culture drag down a deal or hinder growth? What did that look like?

The human element, in addition to segment/industry alignment, is so important. From my perspective, people are the most important element in any deal.

From my previous Honeywell buy side experience, I saw plenty of examples of significant consequences when culture was not considered enough. Culture is a big consideration.

One experience was a company run by 6 partners out of a mid-west firm that operated very differently than our $40Bn organization. When clashes develop between the acquiror and acquiree that can quickly diminish the value proposition. In this instance there was a significant impact on client relationships and sales continuity.

Similarly, employees at a British company doing work in the United States felt very empowered to run their business prior to the acquisition by a German company. After the merger, that empowerment was taken away. Voices could not be heard. It was harder to hold people accountable. In this case, sales quickly slowed, and profitability fell, leading to dilution in value of the target company.

I try to educate sellers about these issues and what the situation will be like after the transaction.

There is a lot of concern with my current deals regarding what the company will look like in the future.

As you think about the next few years, and the projected evolution in your field, what are you most excited about?

Completed transactions are at an all-time high. The economy remains robust and many public valuations are up more than 100% year-over-year. We all hope this strong deal market will continue.

I want to create wins and build on my proven track record. I enjoy doing a lot of networking these days.

On the sell side, defining the culture of the company being sold differentiates our service to the seller. It’s important to set expectations to the buyers and work with both sides. 

We’re so grateful to Judd for sharing his expertise and insights on M&A. Check back here for more future installments of the Deal Makers Series.

Learn more about Leadership & Culture Due Diligence »

Conscient Strategies was founded with the idea that every organization is capable of thriving through change. With a focus on strategy development, program implementation, workplace dynamics, and leadership development, Conscient Strategies equips leaders with the tools necessary to continuously navigate the constancy of change in ways that not only benefit their team, but, equally as important, their business outcomes as well. From mergers to c-suite changes to sudden or explosive growth, organizations turn to Conscient Strategies when change is threatening their financial health and cultural wellbeing.

Based in Washington, D.C., Conscient Strategies is comprised of a talented group of consultants, executive coaches, strategists, and account executives. The team has worked with organizations of all sizes in the private, federal, and non-profit sectors across the United States and Internationally.

 

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

4 + 2 =

How to Develop Leadership & Culture to Optimize Value

How to Develop Leadership & Culture to Optimize Value

In acquisitions, both sellers and buyers spend great effort in financial and operational due diligence, yet far too many transactions fail. Why?

Leadership and culture are critical to a successful acquisition, but frequently they’re ignored. For sellers, recognizing that leadership and culture are linked to enterprise value helps them mitigate risk and drive value in preparation for sale. For buyers, leadership and culture play a critical role in ensuring a smooth post-transaction integration.

Key Learnings:

Leverage real-life examples to learn why the evaluation of leadership and culture matter leading up to a transaction.

Understand what a pre-transaction leadership and cultural assessment looks like.

Learn how addressing these types of risks can drive value for sellers and buyers.

About Value Scout:

Value Scout is the first value creation platform. It enables entrepreneurs to pinpoint their business value today, create and drive a plan to create the value they’ll need tomorrow, and exit on their terms. Value Scout enables entrepreneurs to take a deliberate, proactive approach to value creation. Business leaders and their advisors use it to identify, plan for, and drive all their value creation activities – from growing revenue and increasing efficiencies to improving cash flows and strengthening leadership teams. Learn more at getvaluescout.com.

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

5 + 7 =

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization?

This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to gather feedback from your team. We recommend distributing confidentially so employees feel comfortable being candid and honest.

Enter your email address below to download the 24-question survey.

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

3 + 13 =

Survey Download: DEIB Survey

Thank you!
Download the survey below.

Thank you! Download the survey below.

Other Resources by Conscient Strategies 

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more
The Future of Your Work Part 2: From Survival to Strategy

The Future of Your Work Part 2: From Survival to Strategy

After a year of unprecedented workforce disruption, many leaders are finding that their standard approach to team management, communication, and decision making is no longer adequate. To manage disruption and move beyond survival, we recommend that leaders focus on culture as the core of their future of work (FOW) strategy.

read more
The Future of Your Work: Part 1

The Future of Your Work: Part 1

COVID-19 sent lasting shockwaves around the world, disrupting everyday life, pushing businesses to pivot for survival, and transforming the way we...

read more

Ready to grow a stronger organization? 

Contact us to get started.

3 + 10 =

Deal Makers Interview Series: Jack Tillman

Deal Makers Interview Series: Jack Tillman

In the Deal Makers Series, we interview leaders, experts, and innovators in the Merger & Acquisition and the Private Equity space about how they get successful deals done. The series highlights perspectives of investors, corporate development executives, and buy and sell-side advisors working across industries and geographies.

For the second installment, we interview Jack Tillman the Head of Corporate Development for a leading network of community hospitals in Georgia.

What is your current role and tell us a little of how you got there?

I’m the Chief Real Estate and Corporate Development Officer for the largest health system in Georgia.

I consider myself a generalist. Over the years I’ve had many different roles from consultant and executive to foundation and a university administrator. But, what has been the running theme of my career is an interest in humanity that’s lead me to work within large non-profits across the education, healthcare, and research sectors.

What were some of the biggest building blocks to helping you achieve your leadership position and personal perception of what is good leadership?

I’ve had a commitment to the truth and being a direct and honest communicator since I was very young. Those were values taught in the Catholic school where I was educated and also by my stepfather who was CFO of a major private corporation. He really educated me on the ways the world, especially the business world, actually works, with a focus on common sense and hard work.

Over the years, I’ve built relationships and mentorships with people who also deeply value truthfulness. My current boss who is a mentor of mine, and a former partner, also a former boss, is a great example. We have a high level of candor with each other and that makes both of us better at our jobs. If you are diligent, thoughtful, honest, and back up opinions with data, you may not know the answer right away, but these values will help you get to the best business outcomes in the long run. Those values, and being a person of consistently high character, enable you to have a straightforward reputation that others will gravitate towards.

You’ve worked on a variety of deals and acquisitions. What are some of the factors that you think contribute to a successful acquisition?

Diligence is super important. It’s important to be thoughtful and honest about what you’re really looking for and develop an opinion early on about what will make a good deal. Then you lay out the spectrum of all the different ways a deal might go, a series of options, from the situation where we don’t act on a deal to the one where we overpay for the acquisition. You then carefully consider all these options and scenarios and make plans from there. There are a million different ways a transaction can go, but the key is to be specific about your assumptions and then try to predict how you expect the people to act. You then do the math and base your decisions on your understanding of all the possible outcomes. I’ve learned a lot of these skills from bankers and lawyers involved in transactions, but I think they are also just a good way to approach business in general.

Having a solid deal team in place is also essential. You can’t see everything and we all have blind spots, so having a partner to point out what you’ve missed and who can help observe all the small details and dynamics going on is important.

Beyond the bankers, lawyers, accountants, experts, you need trusted partners who have your back as you make a deal. Deal teams that take this approach, they get consistently good outcomes.

You’ve always worked for mission-driven organizations where culture plays an important role. How important do you think leadership and culture are in creating value?

They are sort of everything to me personally. I won’t work for people or cultures that I don’t align and harmonize with.

Certainly you can make a lot of money and there are plenty of successful businesses out there that don’t care about those things, but success is fleeting if you don’t have the right leadership and culture in place.

In my work, I regularly meet with the many CEOs of hospitals in our network. It’s a great opportunity to see how different leaders and culture do the same work but in different ways. All our hospitals are focused on quality, safety and service. I’ve found that the highest quality leaders who develop high performing cultures are also the stewards of best financial results, at least in our system. Our best performing assets are those with solid leaders with good business acumen who get the very best performance from their team. 

What are those leadership traits that get the best performance? Where exactly do you see the effects of leadership on business outcomes?

Better leadership results in consistent and predicable strong financial returns. These leaders and their organizations still of course have ups and downs, but over time, they provide us predictable and reliable returns. These are the leaders who have a clear understanding of their performance and why it is the way it is. They can explain here is what’s happening, here are the steps I’ll take to address the current situation, and here is the expected result.

These really good leaders are also the ones surrounded by really great people, they are magnetic. Good leadership attracts high performing employees. Good people come in clumps in my experience, they are clumpy. The best leaders unlock the capacity of their teams to perform their best. It feeds on itself.

I also often say that you know who a really good owner is because they can hire bad consultants and experts but still get good outcomes. Weak owners on the other hand may be surrounded by the best consultants and experts, yet their outcomes will continue to suffer. If a leader doesn’t know what they’re doing and does not have good reasons for doing something, then they won’t get the outcomes. Good owners and good leaders drive strong cultures and raise the performance of their teams, internally and externally. 

Do you have a way of evaluating the leadership and culture fit of a potential acquisition?

I’m not in the day-to-day of those decisions and evaluations, but for instance we are in the middle of two ten-figure acquisitions and our CEO and EVP are out there interviewing hospital executives. They’re focused on figuring out how real are these people? Will these people follow through what they say they are going to do? Are they going to execute consistently?

I think a great measure of if someone is “real” is if they are willing to admit they don’t know something. They should absolutely have predictions and opinions and they should be clear about their assumptions, but the best admit the limits to their knowledge. Anyone who says they know everything isn’t very honest, and the people around them respond to that. 

When we evaluate leaders, we are also looking a lots of body language and observing how people treat others around them. What are the team dynamics? How engaged and present are they? Do they know the names and stories of their colleagues? By observing people and their behavior, what they are doing and what they are not doing, it becomes pretty obvious who the real people are. 

As you think about the next few years, what are you most excited about?

Our company’s plate is full. We have multiple acquisitions being finalized, so I’ll be laser focused on integration work for the next year and half or so. I oversee that work and am highly involved at the executive level. We have enough economic risk that we engage heavily in overseeing the details of an integration. Of course, I love deal making, so while it won’t be my focus, there may be some restructuring or small acquisitions we make. We also have a JV urgent care business that has been knocking it out of the park, so continuing to grow that will be fun.

Our focus for the near future is to execute well. We are going from 11 to 18 hospitals and we are dedicated to ensuring that every one of the community hospitals in our system is performing at the highest levels of quality, safety, and service. We aim to provide high quality outcomes with a cost-efficient platform. 

We’re so grateful to Jack for sharing his expertise and insights on M&A. Check back here for more future installments of the Deal Makers Series.

Learn more about Leadership & Culture Due Diligence »

Conscient Strategies was founded with the idea that every organization is capable of thriving through change. With a focus on strategy development, program implementation, workplace dynamics, and leadership development, Conscient Strategies equips leaders with the tools necessary to continuously navigate the constancy of change in ways that not only benefit their team, but, equally as important, their business outcomes as well. From mergers to c-suite changes to sudden or explosive growth, organizations turn to Conscient Strategies when change is threatening their financial health and cultural wellbeing.

Based in Washington, D.C., Conscient Strategies is comprised of a talented group of consultants, executive coaches, strategists, and account executives. The team has worked with organizations of all sizes in the private, federal, and non-profit sectors across the United States and Internationally.

 

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

4 + 10 =

Conscient Leaders: Interview with Roya Vasseghi

Conscient Leaders: Interview with Roya Vasseghi

In our latest Conscient Leaders interview, we talk with Roya Vasseghi, Owner of Vasseghi Law PLLC, about employment legalities in a post-pandemic workforce.

Read the full transcipt below.

Hannah:
Hello, everyone. Welcome to our next installment of Conscient Leaders. I’m so excited to be joined today by Roya Vasseghi of Vasseghi Law. Roya, do you want to tell our friends and listeners a little bit about you and about your law firm?

Roya:
My name is Roy Vasseghi. I have my own law firm, Vasseghi Law PLLC in Fairfax. One of the major areas of my practice is employment law. Um, so I work with employers mostly on their compliance with the changing employment laws, training, investigations, if they need it.

Hannah:
We have so many clients who are really struggling with some of the return to work and, um, and just managing the ebb and flow of the pandemic that I thought it would be great to talk to you a little bit about some of the things you’re seeing in your practice and some of the legal perspective on how corporations take themselves forward in this fairly murky environment. When you’re in an office setting, people have the ability for the informal mentorship in informal discussions with superiors and the people who are on video and who have chosen to stay home for safety reasons don’t have that informal or more like on the go get to know people, um, that luxury, I guess you could call it. Um, and so then when it comes to promotions and salary increases, how do you compare the two people who presumably are both up for the same promotion, but one hasn’t been necessarily been afforded the same opportunities just by nature of being in the office or not being in the office?

Roya:
From the company standpoint, they’re going to have to try to keep, you know, they can’t just say out of sight, out of mind and then wait for the performance evaluation to say, well, I haven’t seen insert name, you know, so-and-so, um, Jane we’ll say Jane, I haven’t seen Jane for the past six months. I don’t know if she’s doing her job. Uh, we’re going to give the promotion to her next door neighbor who comes into the office everyday. Like I think that would be, um, pretty clear discrimination and preferential treatment, assuming, everything, assuming all else is equal or, you know, just as you’ve said that they’re getting the opportunity, the other ones, their coworkers getting the opportunity because they’re in the office. Um, in an ideal world, you have managers that are, that are good managers and they’re giving just as much attention to their in-person colleagues as they are to the people that are on zoom.

They’ve got regular check-ins, they’ve got ways of communicating with their remote employees. I mean, like by phone, good old fashioned phones so that they’re making sure to keep those, um, those employees that are working at home in the loop and making sure that they’re still getting projects, assignments and things like that that are preferable. I mean, the, a lot of it is also gonna, you know, that’s from the employer standpoint. Unfortunately, you’re going to have really great people that can work from home and are really good at saying engaged, and you’re going to have the people that just kind of put their head down and do their work, and they don’t know how to be engaged, and it’s really on the company and the managers to make sure that they’re keeping those people engaged and not indirectly or inadvertently discriminating against them or treating them differently because of whatever conditions kept them at home.

Hannah:
I’m curious, um, it’s not illegal to require vaccinations of your employees. However, it is not necessarily recommended as it could be seen as discriminatory?

Roya:
It can, it can be illegal. You can, you can have a mandatory vaccine policy, but you have to do it recognizing that there will be, um, exemptions, medical exemptions to that mandatory vaccine policy, and you’ve got to make sure to get that information, um, you know, make, put that information out with your policy so that your employees understand that they are not obligated if, if there are certain conditions that prevent them from getting a vaccine that they’re not going to lose their job, that they don’t have to get the vaccine. There is an exemption, and then there are religious exemptions as well. Um, that also has to be clearly communicated with the policy I have been recommending. Um, and some people, some companies have been doing mandatory vaccines. I have just been recommending to strongly encourage the employees to get it and not make it mandatory, to avoid kind of having to solicit, you know, accidentally solicit medical information that you shouldn’t have as an employer that you shouldn’t have had access to and then now you’re, you know. People are very casual about the vaccine thing, right. Um, have you been vaccinated? Like I ask that question all the time in my circles, but as an employer, I would think twice before I just, you know, jump into that conversation or divide my employees based on who’s been vaccinated and who’s not been vaccinated. There are ways to do the mandatory policy, but employers just have to be really careful, um, about how they administer it and the information that they’re getting back.

Hannah:
What else might business leaders want to take into account as they’re thinking through considerations for a hybrid work environment or a total virtual work environment.

Roya:
If the employers are requiring everybody to come back into the office and people want to stay behind and have remote work as an accommodation because they’ve been able to do it for the past 12, 14 months, um, there is guidance that says just because there’s been remote work in a pandemic, it doesn’t mean that that needs to be a permanent accommodation. I think a lot of those questions are going to be coming up. So why, why do you need the accommodation? Um, I think it’s going to be really hard for employers to say if the accommodation is actually necessary. I think it’s going to be hard for employers who have been remote working and providing remote work opportunity to go back and say, we can’t do that because we’re not equipped because it happened, and we were all just fine. Uh, but I think there’s going to be a lot of requests like that, a lot of issues that employers are working through, as far as the, you know, when they want to bring people back in the office, having the request to stay permanently working from home.

Hannah:
Roya, thank you so much for taking the time to talk with us today. Um, this was fascinating to hear some of the things that you’re running into in your practice and I do love how the things you work on and the things we work on overlap, so, so nicely. Um, thank you everybody for tuning in, and we look forward to talking with other Conscient Leaders in the next few months.

 

About Vasseghi Law:

Vasseghi Law PLLC is a business and employment law firm located in Fairfax, Virginia. Roya Vasseghi founded Vasseghi Law after honing her advocacy skills working for several prominent Northern Virginia and national firms. Vasseghi Law’s services range from civil litigation to employment counseling. Roya represents individuals and companies in a wide range of civil disputes including employment-related claims, contract disputes, and partnership disputes. Roya also works with her clients to stay on top of changing employment laws and regulations with an eye toward avoiding costly litigation. Learn more at vasseghilaw.com.

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

6 + 2 =

Deal Makers Interview Series: Jonathan Moore, PKF

Deal Makers Interview Series: Jonathan Moore, PKF

In the Deal Makers Series, we interview leaders, experts, and innovators in the merger and acquisition and private equity space about how they get successful deals done. The series highlights perspectives of investors and buy and sell-side advisors working across industries and geographies.

For our first installment, we interview Jonathan Moore, Partner and head of Advisory Services at PKF O’Connor Davies, a leading accounting and advisory firm.

What is your current role and tell us a little about  how you got there?

I’m a Partner at PKF O’Connor Davies, a Northeast-based regional accounting firm with approximately 1,000 employees. We provide full-service accounting, tax and advisory services to our clients. I head up advisory services which includes the consulting practice, transaction, risk, cyber and digital advisory, along with our TalentConnect and investment banking services. 

 Before joining the firm, I was a Partner in a smaller accounting and advisory firm that merged with PKF O’Connor Davies in 2016. I wear many hats within the company.  I lead both the Transaction Advisory Practice and am also  the Head of Corporate Finance for PKF North America.

Tell us about a typical client for the Transaction Advisory Practice? What does the work helping them consist of?

Seventy percent of our transaction advisory business is generated from working with private equity (PE) firms who are making a new investment in a business to acquire it or are purchasing an add-on to an existing platform company they own. In this case we perform the financial due diligence, provide a quality of earnings report about the target and  analyze the tax and other financial implications of the transaction.

We also do work with sell-side clients, helping business owners get ready to sell. We prepare a quality of earnings report evaluating the financial position and earning potential of the company. This helps a seller understand how much they can expect to sell their company for. We also assist with tax due diligence and often conduct cyber and IT reviews as well. In the digital age, and now in a more virtual work environment, cyber and IT considerations are becoming more critically important for buyers and sellers.

You’ve work on a variety of deals and acquisitions. What are some of the factors that you think contribute to a successful merger or acquisition?

In terms of the numbers, the quality of earnings report is key. The valuation and purchase price for a company are directly tied to a company’s historical financial results and the quality of earnings is how we measure this. Target acquisition companies or owners who provide numbers that are defensible, understandable and trending in the right direction is huge for ensuring a smooth and relatively quick transaction.

Other key factors that make for successful transactions include a leadership team that presents a clear vision and an understanding of their growth targets plus data to back it up. When companies show they have systems to monitor performance and have given thought to the type of culture and workplace they are fostering, those are also positive indicators.

It’s about companies proving with data that they have plans, strategy, vision and strong financials. When these components are in place then deals happen fast and all parties walk away happy.

Are there any common lessons or themes you’ve seen in deals that are not successful?

Yes, my team often jokes about how we should create a podcast like “Confessions of an M&A advisor.”

On the financial front, an inability to provide and show trustworthy or reliable financial information is the biggest  impediment to a successful deal, buy or sell side. If there is a lack of insight on what is driving a company’s performance and little ability to explain why targets are missed, then it can be challenging to get a deal done. A buyer won’t trust that management can deliver on what they are promising.

Too often, I’ve seen transactions fall through when there is a clear mismatch between the culture, mission, values and communication styles of two organizations. It becomes clear during negotiations and discussions around a deal that the two companies are simply not rowing in the same direction and in these cases deals are typically  not finalized.

There are also challenges when a seller doesn’t necessarily understand all the very complicated and nuanced features of the deal. If someone has never done this kind of transaction before, especially if they’re selling to an experienced and larger buyer, then the seller may not understand all the potential implications of the deal. For instance, they may have been conducting business on a cash basis for the lifetime of the company, however the buyer is evaluating the company’s financials on an accrual basis – or a more detailed level. The discrepancy in the expectations of the financial differential between these two perspectives can result in a mismatch of expectations and even unexpected tax implications for the seller, and I’ve seen deals fall apart for this reason. 

How often do these problems become clear before the transaction is complete versus once the deal is done?

For issues related to finances, they typically appear as due diligence is completed and the terms of the deal are negotiated. But for culture, leadership or communication issues, these often don’t show up or are ignored until the integration phase at which point the deal is already closed. The focus is then on how to fix them in the best way to keep the return on investment (ROI) of the deal on track. 

To avoid problems and mitigate risk pre-deal, as you advise on a transaction, what are the most important pieces of data you perform in due diligence?

From a quantitative perspective, everything is on the table. We focus on reviewing historical business trends across product, margin, sales, fixed vs variable costs, cash flow, inventory, customer churn and concentration, supplier terms and more. What is most important can vary based on the value drivers of the specific business. 

 What we also find  important is asking buyers, “what are the value drivers in this acquisition? What is your investment thesis?” This helps us frame our work in the way that is most relevant to the client’s strategic decision making.

 When we work on the sell-side, we draw on past experience, working with the founder to identify what the investors are going to want to see. We want to help them present their company and its financials in a manner that is reliable and defensible and also be in a better position to mitigate risks. 

Often, organizations start to address cultural issues only when there is a problem. In an ideal scenario, when would leadership and culture come into play for an M&A deal?

Ideally, it’s before the deal is even talked about. I think about this from the perspective that every business should have a succession plan which identifies the value drivers of the organization and how to ensure that the company keeps growing even as leadership may change. Culture is a key part of these value drivers and evaluating it should be part of the succession planning process. Indeed, culture can trump numbers. When thinking about a deal, if everyone shares the same values, then it’s easy to move forward and get the desired financial results. But if two organizations are not aligned on values, culture and mission, while  the financials may look good, they will find it challenging to grow together. So really, the earlier the better.

Culture can trump numbers. When thinking about a deal, if everyone shares the same values, then it’s easy to move forward and get the desired financial results. But if two organizations are not aligned on values, culture and mission, while  the financials may look good, they will find it challenging to grow together. 

 I’ve experienced firsthand why culture matters in M&A. I worked for a small firm and when we were small it was easy to manage culture, then as we grew and as we looked to merge, we had to really consider culture. When we started to look to merge, it became evident that it wouldn’t work for us to join certain firms because our cultures were too different. We didn’t want to merge if it would require throwing out the culture we’d worked hard to develop.

What is the value of integrating leadership and culture into due diligence? How does this look in practice?

In many situations the current management or ownership will stay on even after the deal, to lead the transition or roll over some of their ownership into the new company. Private equity firms are looking to back specific leadership teams. A critical part of our work then is to understand the investment thesis of the buyer and how specific leadership traits or teams would fit within this thesis. Buyers need to evaluate if leaders really share their vision for the growth and strategy, and if they have the skills and behaviors needed to execute. 

Often, buyers just go off “gut feelings” but everyone is on their best behavior during a transaction and the “gut feeling” cannot ensure that when the deal goes through that the leadership is prepared to implement changes and achieve targets. Buyers want evidence and data to back up the financials and performing systematic assessments of leadership and culture during due diligence can ensure there is evidence to back up “gut feelings.”

Have you ever seen leadership and culture drag down a deal or hinder growth? What did that look like?

I’ve certainly seen instances when we have dug further into a deal, leadership and culture problems have become very obvious. There have been major issues with communication and misaligned values and vision. If we’re lucky, these problems become clear early in the due diligence and plans to address them can be made, but sometimes these issues are not clear or are overlooked until a deal goes through and targets are missed.

How about on the flip side? Where have you seen strong leadership or cultures drive growth? 

I find markers of strong leadership and culture to be when leaders are answering questions before I even ask them. This shows that a company is motivated to get the deal done and is thinking through the implications of the deal. When the target company answers questions based on fact and not emotions or projections, that’s a sign of good leadership. I can think of specific transactions too where the culture of the target acquisition was very focused on empowering employees to drive results and the positive evidence of that culture could be seen in the financials and in how people interacted.

Overall, when those involved in the deal are looking for a long-term investment and growth, rather than a quick pay off, a transaction goes on to be successful.

As you think about the next few years, and some of the evolution, what are you most excited about?

In general, there is so much momentum for deals. There is so much capital, between dry powder in PE and lots of cash sitting on corporate balance sheets, to be deployed. Then the baby boomer generation is starting to make succession plans and look to transition out of ownership. I’m excited about how much liquidity is in the market —  so much capital looking to be deployed. Plus, there is all this new technology that is changing the ways we work. I think this combination just makes me excited for a future full of robust M&A activity. I’m looking forward to getting the pandemic behind us and ramping up our transaction practice.

Beyond that, I am also excited about shifts internally about how we do our work. I think we are starting to take a more holistic approach to evaluating a business, looking at the quality of earnings but also the quality of leadership, systems, technology, data and culture. Additionally, looking at how business on both the buy- and sell-side and considering the environmental and social impacts of their work. That kind of impact evaluation is something new that we’re beginning to focus on. I think it’s important we incorporate all these facets into how we do our analysis and then leverage technology to make the process even more seamless and efficient. 

We’re so grateful to Jon for sharing his expertise and insights on M&A. Check back here for more future installments of the Deal Makers Series.

Learn more about Leadership & Culture Due Diligence »

Conscient Strategies was founded with the idea that every organization is capable of thriving through change. With a focus on strategy development, program implementation, workplace dynamics, and leadership development, Conscient Strategies equips leaders with the tools necessary to continuously navigate the constancy of change in ways that not only benefit their team, but, equally as important, their business outcomes as well. From mergers to c-suite changes to sudden or explosive growth, organizations turn to Conscient Strategies when change is threatening their financial health and cultural wellbeing.

Based in Washington, D.C., Conscient Strategies is comprised of a talented group of consultants, executive coaches, strategists, and account executives. The team has worked with organizations of all sizes in the private, federal, and non-profit sectors across the United States and Internationally.

 

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

7 + 3 =

Conscient Leaders: Interview with Michelle Hairston

Conscient Leaders: Interview with Michelle Hairston

In our latest Conscient Leaders interview, we talk with Michelle Hairston, CHRO of one of the largest home builders in the country, to get insight on how organizations can navigate the ups and downs of turbulent times.

Read the full transcipt below.

Hannah:
Hi everybody, welcome to our next edition of Conscient Leaders. I’m so excited to be joined here with my friend, Michelle Hairston. For those of you who are just getting up to speed, Conscient Leaders is our Conscient Strategies fun conversations—we love talking with leaders around the country and the world about what is going on in their neck of the woods and what they’re learning on a day-to-day basis about their own leadership and their organization’s growth. So today I’m super excited to introduce you to Michelle Hairston. She is the CHRO at Pulte Homes. Michelle, do you want to tell us a little bit about Pulte and your position?

Michelle:
Sure, thanks Hannah, nice to see you. I work with PulteGroup, we’re one of the nation’s largest home builders. We are the oldest home builder, founded in 1950, and we’ve built over 750,000 homes. And I’m the CHRO, so I lead our HR team and our talent strategy and how we bring in great talent, develop great talent, plan for succession, and many other things in that space.

Hannah:
Everybody talks about, “2020 was the bumpy ride.” I always love to look at, what was one of the things you were most proud of as you kind of went through the turbulence of 2020?

Michelle:
Yeah. You know, 2020, and I dare say 2021 will be very similar in this regard and you know, what I think I’m most proud of for myself, but also with the leaders I work with at Pulte is there was no playbook for anything we experienced in 2020. Market condition changes, pandemic, the civil rights movement kind of re-emerging and social injustice coming into the workplace like it never has before. I mean, any one of those things I think would have been a major event. And all three of those—and then some—in a year, that there’s really no play for [that]. I’m most proud of how we leaned into our guiding principles, stayed true to kind of our North Star of what we put in…important in our values in our company, how we want people to make decisions, and how we really leaned in to empathy, to communication, to transparency. When sometimes I think it’s really hard to say, “I don’t know.” And we didn’t back off of the fact that we didn’t have the answers to a lot of things. But that we were engaged in trying to figure out the best solutions, keeping safety first, our employees first, and really working through our guiding principles as our North Stars for our decision-making.

Hannah:
I would imagine that really fostering culture within your organization over the last year has been one of the other challenges. What have you guys been doing to do that, as you have teams all over, and helping everybody else align to your values?

Michelle:
I think this has been one of the biggest challenges and will remain one of the biggest challenges as I think people’s expectation around what work looks like will be forever changed post-pandemic. And I think for us, what we really focused on was connection and communication. So, constant communication with our leadership teams, daily calls, weekly calls, individual check-ins, just saying, “Hey, I know we’re struggling. What do we need to do to, what are you hearing from people?”, you know, is what we did. Is it landing the way we wanted it to land and get really active two-way communication on what’s happening with the priorities of the organization or how we’re trying to move things forward. I think the second piece on an individual basis is ensuring there’s connection. How are managers connecting with our employees, how are employees connecting with each other? So much of our culture has been based on Bill Pulte and how he founded the company, and it being really family first and employee first. And so making sure that in the pace of play and the hecticness of navigating through the pandemic and the market environment, that really just took off in home building, that we stayed true to making the time to check in with each other.

Hannah:
As we look to 2021, we know that in as much as we’re all hoping for a bit of a calmer year, we can expect that it won’t be—it just won’t be. So what is a piece of advice you would leave with people today?

Michelle:
I think my big word for the year last year was “empathy.” And I think it holds true for 2021. I think we all need to have empathy and patience with ourselves. I think we need to have empathy and patience with what our team members are experiencing. And I think we need to lead with empathy every day, to appreciate that whether people are struggling with pandemic, health concerns, whether they’re struggling with childcare concerns, managing virtual schooling—which is an unbelievable feat—or struggling with coming to terms with some of the racial injustices and systematic, social unrest and different things that have kind of come to the forefront. And I think helped people see things differently last year, that it’s important to keep empathy front and center and to really ensure that you’re listening, that you’re open to hearing different perspectives, and that you’re making the time to connect.

Hannah:
That’s great. Thank you so much, Michelle. We truly appreciate all the genius that you’ve brought to the table today.

Hannah:
Thank you. Nice to see you Hannah.

 

About Pulte Homes:

PulteGroup, based in Atlanta, Georgia, is one of America’s largest homebuilding companies with operations in more than 40 markets throughout the country. Through its brand portfolio that includes Centex, Pulte Homes, Del Webb, DiVosta Homes, American West and John Wieland Homes and Neighborhoods, the company is one of the industry’s most versatile homebuilders able to meet the needs of multiple buyer groups and respond to changing consumer demand. PulteGroup’s purpose is building incredible places where people can live their dreams. Learn more at pulte.com.

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

1 + 10 =

6 Tips to Keep Key Employees from Jumping Ship After a Merger

6 Tips to Keep Key Employees from Jumping Ship After a Merger

with guest author Katie Lipp | March 23, 2021

While a merger is an exciting opportunity for growth of a new company, it can also be a difficult transition for employees. Here are six tips for how to improve employee retention during the post-merger integration:

Create Buy-in with Key Employees.

Before the merger, review the roles of key employees and consider how they may shift post-merger. Then have conversations with the employees to create buy-in for the merger and ensure alignment on any changes to their role. Finally, it is a best practice to have the key employees sign new contracts under the new company and provide them with a retention bonus to stay on post-merger.

Standardize Policies.

It can be easy for companies, and their employees, to struggle with which policies apply post-merger. Audit your company’s employment policies to ensure they are up-to-date, legally compliant, and standardized for all employees.

Get Employees to Acknowledge and Receive Training on New Policies.

Once which policies apply has been determined, there remains the challenge of ensuring all employees are up to date on the applicable policies. Some policies may be new to employees of one of the companies, or language may have been updated in the merger. It is essential to train employees on how the policies work in action and have a signed acknowledgment of each policy in their HR files.

Spread a Clear Branding Message.

Following the merger, it is critical to train employees on the branding message for the new entity and ensure that everyone is aligned on primary goals moving forward. By cultivating a shared brand message and understanding of the new company’s mission, you are encouraging employee buy-in and engagement.

Avoid a One-Size-Fits-All Approach.

Post-merger, employees are trying to see if the new entity is a good fit for them. Flexibility is key to ensure that employees do not get “my way or the highway” messaging.

Be Patient and Give it Time.

Post-merger, don’t expect employees to immediately snap into their new roles. Give transition time, coaching, support, and training on the company’s new goals and objectives. Patience is key.

Special thanks to guest author Katie Lipp

Katie Lipp, Esq., Owner of the Lipp Law Firm, advises companies and executives throughout the DMV area on employment and business law, with a focus on HR consulting and separation of employment. After assisting with hundreds of matters involving employee separations, many times related to a merger, Katie has tips to increase employee retention.

Connect with Katie on LinkedIn.

Conscient Strategies was founded with the idea that every organization is capable of thriving through change. With a focus on strategy development, program implementation, workplace dynamics, and leadership development, Conscient Strategies equips leaders with the tools necessary to continuously navigate the constancy of change in ways that not only benefit their team, but, equally as important, their business outcomes as well. From mergers to c-suite changes to sudden or explosive growth, organizations turn to Conscient Strategies when change is threatening their financial health and cultural wellbeing.

Based in Washington, D.C., Conscient Strategies is comprised of a talented group of consultants, executive coaches, strategists, and account executives. The team has worked with organizations of all sizes in the private, federal, and non-profit sectors across the United States and Internationally.

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

7 + 5 =

Conscient Leaders: Interview with Emily Barson

Conscient Leaders: Interview with Emily Barson

In our latest Conscient Leaders interview, we talk with Emily Barson, Executive Director of United States of Care, about how her team responded and evolved in many ways in 2020, and her advice on how leaders in any sector can effectively navigate 2021—and beyond.

Read the full transcipt below.

Hannah:
Hello everyone. Welcome to our next installment of Conscient Leaders. I’m Hannah Romick, the co-CEO of Conscient Strategies, and I’m here with Emily Barson. We’re so excited to have a conversation today about all fun things leadership in the time of COVID and in 2020 into 2021. Emily, it’s so great to have you with us today. Why don’t you tell the world a little bit about who you are and why you are.

Emily:
Sure. And thanks for having me. I’m Emily Barson, I’m the executive director of United States of Care, which is a non-partisan non-profit organization. We just had our three year birthday, and our mission is to ensure that everyone has access to quality, affordable healthcare, regardless of health status, social need or income.

Hannah:
Such a great mission. Healthcare in America and around the world has been shifting. And I almost see it as like a shape-shifter like over the course of the last few years. So it’d be great to hear how you’ve been managing over the last year. And some of the things your organization has been doing—the list is not small.

Emily:
Yeah, absolutely. Well, um, you know, overall we really do our work in a way that tries to center the needs of people and that’s sort of our touchstone of knowing that the healthcare debate and healthcare reform has become very political and, you know, very focused on, you know, the political ramifications. And what we try to do is really take a step back and look at what all the needs are that unite people, that there are shared needs across people, regardless of their, of their politics. Obviously as COVID hit and we realized what the scale and the scope of the crisis was going to be, we realized that we needed to be part of the solution. And so we really jumped in, in March of 2020, um, almost a year ago now. And were able to step into the response effort, um, developing resources for policy makers, and playbooks to highlight best practices. We were connecting, you know, sort of incoming needs from state leaders to resources. We partnered with COVID exit strategy, which was a group trying to really use the data to drive evidence-based decision-making about reopening. And you know, we really saw this as critical to just surviving and, you know, really helping support the needs during the immediate term. And also looking ahead to, “how can we be part of building a better healthcare system in the wake of this pandemic?”

Hannah:
It almost sounds like you didn’t miss a beat once the pandemic hit, and yet I suspect it probably was not exactly in your plans to undertake all of these initiatives. So I’m curious, “pivot” is one of the big words of the last year. You, I’m sure if you did a Google search, you’d get a bazillion responses. I’m curious how much of that was a pivot and what did it take to create that pivot?

Emily:
Yeah, I mean, it certainly was, especially for the first few months when there was just so much to wrap our arms around just even, um, understanding the needs and what the gaps were that we could be valuable in addressing in ways that might not have been what we thought we had. Certainly weren’t what we thought we were going to be doing when we set our 2020 goals and work plans. But you know, sort of stepped into what we knew we needed to do. And, you know, for the first several months, it really was a pivot where our entire organization shifted gears and was sort of all hands on deck, in a bit of a re-imagining of, uh, of our role, to do this really, in a timely way. And, you know, it has certainly maintained, or, continued to be a priority and really top of mind, now, you know, moving into the next few months, seeing that vaccine education and outreach, and again, just sort of like focusing on people’s needs, bringing science-based information, you know, that’s sort of where our next frontier is. And I think, you know, ultimately we see that there is a lot of agreement that it’s not enough to just go back to normal, you know, go back to the way the healthcare system was before the pandemic. I think the reality is we’ve seen so much of the shortcomings that a lot of us knew were there, but have just really come to light. And so I think it really renews our charge towards our ultimate mission and maybe even opens the door for reforms that politically may have not been possible before.

Hannah:
The other things your organization has been working on over the last year, if not more, is the diversity, equity and inclusion, work internally and in service of the people you’re advocating for. I’d love to hear how events in the last year have, um, really impacted the way your team has been thinking about it and what you’ve been doing to really highlight that aspect of how you’re leading the organization.

Emily:
Yeah. It’s been really an important piece for us, as you said for more than a year we’ve been working through, both the internal, and the external implications. And I will say, you know, certainly the events of last spring and summer, and really this renewed and overdue national conversation around racial justice and around racism. And, in particular in our work, you know, in healthcare, which are really manifesting in the disparate impacts of the pandemic, has I think really just reaffirmed that this was needed to be a priority and certainly lifted it up as, as more of a priority for us and for across the sector. I think, you know, we’ve brought in a health equity fellow to help us, really have a view across the work as to how we can be more intentional and more thoughtful about lifting up equity issues. We’ve developed an equity lens that, you know, really helps us just sort of step back as we’re stepping into projects or different programs and, you know, ask ourselves the key questions to make sure that we are being intentional about infusing that across our work.

Hannah:
One of the last questions I’ll ask is what advice might you have for other leaders out there? As we think about heading into 2021, whether it’s around resiliency or just organizational strength, what are some of the things you’re taking with you and what are some things that you would share with others?

Emily:
I think, you know, really in this space of resiliency, but I would, at least for us really think about it as being nimble and, you know, knowing that we, the best laid plans may not come to be, but that, you know, what we experienced allowed us to sort of see another side of our mission and our strategy and another way that we could be impactful in meeting people’s needs. And, I think that was a great lesson in allowing ourselves to step out of set plans and do the pivot that we needed to do. And while I hope that 2021 won’t encounter another full pivot, you know, obviously we realize that the impacts of COVID are not going anywhere certainly on the immediate impact on our lives this year. But also when you talk about working in the healthcare advocacy space, we know that there is no pre COVID and post COVID that, you know, this is going to impact the work that we do for years. And so, you know, I think it’s been a really important learning period for us to think about the framing and the world in which we work and how we can be sort of moving the message forward of rebuilding stronger in the wake of COVID. And that’s obviously very direct in an organization that works on healthcare access and affordability, but, I think it’s really a lesson that’s transferable to other leaders as well.

Hannah:
That’s great. Thank you so much, Emily, really appreciated your time this morning, and look forward to continuing our conversations with you over time.

Emily:
Likewise, thanks so much. Thank you.

About United States of Care:

The mission of United States of Care is to ensure that everyone has access to quality, affordable health care regardless of health status, social need, or income. A non-partisan non-profit, the organization is building and mobilizing a movement to achieve long-lasting solutions to make health care better for everyone. United States of Care will help make it happen by working with Americans from across the country: patients, caregivers, advocates, clinicians, policymakers, and business, civic, and religious leaders. Learn more at unitedstatesofcare.org.

You may also be interested in:

DEIB Employee Experience Survey

DEIB Employee Experience Survey

DEIB is a journey. Where is your organization? This survey contains sample diversity, equity, inclusion, and belonging questions that may be used to...

read more

Ready to grow a stronger organization? 

Contact us to get started.

1 + 5 =