DiscoverM&A STORIES - The Good, The Bad and The Ugly
M&A STORIES - The Good, The Bad and The Ugly
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M&A STORIES - The Good, The Bad and The Ugly

Author: Robert Heaton & Toby Tester

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These M&A War Stories podcasts are for anyone engaged in M&A or Divestment activity. Every week your hosts Robert Heaton & Toby Tester, along with special podcast guests, will draw on their past M&A experience through case studies and what hopefully will prove to be interesting stories. By chipping in with our own thoughts and experiences our aim is that all of us professionally involved in M&A – CEOs, CFOs, Executives, Consultants and Advisors, get that little bit better next time round.
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In recent weeks Rob and Toby have veered slightly off the M&A topic to explore the emerging world of AI and how it might shake up M&A as we know it.  In doing that we've arrived at the challenges of adopting adequate regulatory and ethical controls for AI and never mind the slow cumbersome legal system and how that might cope with AI.The key point is that AI needs global standards for regulation, ethics and legal controls and anyone with a degree of experience knows how difficult that might be to achieve. In Australia, it's almost impossible getting individual states to agree on a standard never mind a global scale.Rob's view is that ethical and regulatory controls can be embedded into any AI programs at source and that if the big players (Microsoft, IBM, Amazon, Cisco, Oracle, SAP can be encouraged to do this, we might at least cover 80% of the challenge.What are your thoughts?
Robert and Toby have been clamping at the bit to start talking about the need for strong ethics, regulatory and legal instruments to manage and control the global adoption of AI.There's no doubt about it. AI has the equal potential to cause untold harm, and the scandal playing out with the UK Post Office is a stark reminder of how ethics can be completely railroaded. That is why it must be developed ethically. And that's what we're going to go into the next podcast. But today, we've been talking about the Post Office scandal because it offers a vivid example of when ethics and ethical principles play no part.And I think the lesson we need to learn from this is that we must protect people themselves from the very real harm. that could be caused by AI. To do this, we need to build the ethical foundations and the framework around the technology for the common good of individuals, societies, and indeed all of humanity. Furthermore, those ethical controls must be universal. And that raises the question posed by Robert. Should an ethical framework be built into all AI platforms so that the user is offered no choice?  This and other questions at large will be the topic of our next podcast.
This week, the Dynamic Duo of Robert and Toby ponder on whether AI will drive a new wave of AI-influenced M&A transactions - or not.   Certainly, 2023 has seen a 40% downturn in M&A volume globally so what evidence is there that AI will offer a stimulus and create a new wave of transactions?It's not a simple question to answer because AI is still in its infancy, but adoption is accelerating at an alarming pace whilst regulation and legal controls are somewhat lagging and undeveloped.The duo give this topic a good thrashing and generally come out in agreement with each other that AI WILL drive a new M&A wave.  That said, Toby is of the opinion that it might be five years away because regulatory and legal reforms have not been developed.  On the other hand, Robert believes that scrupulous organisations might force legal and regulatory controls to be adopted much quicker and the expected wave might be only one or two years away. Time will tell. 
Robert and Toby continue to delve into the topic of AI and in this episode, we start to examine how AI is or will impact each of the typical M&A processes. As the duo walk through the process from Deal Sourcing to Due Diligence and then into Legal Contracts and Valuation it becomes clear that AI is already playing a strong role in some aspects of M&A. But equally, there are other areas where AI might play a supporting role, where the need for human intervention is still prominent in what Toby refers to as 'the art of M&A' There's also our long-standing view that the current 'narrow' AI is simply another tool that can be harnessed to significantly advance the quality and efficiency of M&A transactions BUT like all tools, it is the quality of input that determines the quality of output. GIGO (Garbage In = Garbage Out.We've still got more to unpack on the topic of AI in Mergers and Acquisitions, and we hope our thoughts and viewpoints stimulate your own thought processes. What do you think? Are you in agreement with Robert and Toby, or do you have a different viewpoint?  We'd love to hear what others have to say.
In the last episode, the dynamic duo (Rob and Toby) started to talk about the emergence of AI, and this week, we continued the conversation to try and put some definition to AI.  And we also tried (but failed) to stay grounded and not get dragged into the stratosphere around AI.Anyway, this week's podcast was more serious than others as we sub-categorised AI into Machine Learning, Deep Learning, Narrow AI, General AI and Super AI; and that's probably just touching the surface.We also tried to understand our personal position (as intelligent laypersons) on whether we were optimistic about AI's potential or deeply concerned about some of the dangers that AI might pose. And that ranged from the benefit to humanity as a whole (imagine AI bringing education to everyone irrespective of race, or social standing) right through to AI being harnessed for personal gain by the super-wealthy and politically powerful. And there's the easy leap from trying to define AI into a stratosphere discussion in the space of a few minutes.The good news is we recognized our distraction and solemnly promised that we would return to AI basics and discuss its use and potential use in M&A transactions. That's next week's topic so tune in to find out if we managed to contain ourselves.
Robert and Toby often get together like old men on a park bench, to discuss a variety of topics. Some of them become podcasts, others don't. And sometimes one topic sparks a discussion on something different. That was the case recently when the dynamic duo was trying to get their heads around AI and what impact it is/will have on the world of M&A. It was from that discussion we asked ourselves what tools are currently used to manage M&A transactions and we concluded that the technology is not much more than a spreadsheet on steroids with a simple data room and a database bolted on. Yes, I know we're being harsh, but what really came out of the conversation was the idea that the gap between current technology tools and AI is massive and we ended up with a  view that AI will have such a dramatic impact that it's easy to equate it to that period where parts of China went from Abacus to Advanced robotics.But that's jumping ahead of ourselves. We will start to discuss AI next week and we'd welcome anyone to join us who is keen to offer their thoughts and experiences. But in the meantime, we thought it was worth drawing the baseline and explore what tools are currently available and whether they are adding value to M&A transactions. 
There is one certainty in life and that is if you choose any metaphor, Toby Tester can link it to M&A, and he doesn't even blink.In today's podcast, Toby manages to draw a distinction between the behavioral characteristics of pirates of old and those of several modern-day corporate heavyweights such as Rupert Murdoch, Elon Musk, and Lord Hansen. Toby's view is that just like pirates of old, modern-day pirates possess a number of valuable behavioral traits i.eDare to think like a pirateDare to do things differentlyDon’t listen to naysayers.Surround yourself with people not afraid to step out of their comfort zone.Be a mentor to othersAvoid people who complain a lot.Approach life with positivity and optimism Don’t be afraid of failure. Moreover,  during their conversation, Robert and Toby conclude with several recommendations that the modern pirate (CEO) should add to their M&A toolkit.Look at opportunities to deliver value beyond due diligence estimates.Don’t accept the synergies defined pre-deal are the only synergies to be delivered- there’s always more, alot more.Get people in involved in a joint treasure hunt by running synergy workshopsUses M&A as a catalyst to transform.Adopt a transformation (not transaction) mindsetTurn the M&A exercise into a treasure-hunting game.Take an activist approach to managing risks.And Remember: there’s buried treasure in every M&A deal.
To start with a tongue in cheek disclaimer: If we've offended any Corporate Lawyers or Investment Bankers in the recording of this podcast, we did so with gusto and enjoyed having a dig at your expense :-)  But enough of that. When and where did the term M&A originate?We use the term M&A freely as part of everyday language, but when and where did it all start. Our dastardly duo jump into their time machine and head back to 1602 when the Dutch India Company was formed and became the first truly recognised 'corporate entity'. Fast forward 100 years and the Dutch India Company merged with one of its competitors to stave off a downturn in business.By the 1800's the world of corporate finance was in full swing and London was the recognised finance centre of the world.  And that was the catalyst for companies to trade in shares, raise various forms of finance and start the process of buying and selling businesses. The process we know today as Mergers and Acquisitions.And since then the world of M&A has literally exploded through what Robert and Toby describe as 7 distinct development stages. And today you won't be surprised to learn that since 2000, more than 790,000 transactions have been announced worldwide with a known value of over 57 trillion USD.Listen to today's podcast and see if you agree with our 7 phases of M&A.
Just when you thought it was safe. Just when enough time had elapsed that you thought the future was safe and secure - - - THEY'RE BACK!Yes, after a hiatus of 12 months, the deadly duo of Robert Heaton and Toby Tester have returned to their popular podcast with even more M&A Stories.Today's episode is just an introduction to give you a flavour of what we will talk about. As always, our intention is to share our experiences, provoke thought and conversation and help other practitioners who are about to embark on an M & A transaction.
It's the first podcast for 2023 from your hosts Rob and Toby and in this episode, Toby focuses on the top 5 post-close questions a CEO needs to ask on any deal.  But before we start let's put the CEO's task into perspective.  He's just spent the best part of last year focused on the deal, the constant back-and-forth conversations, the massive efforts around due diligence, the stress of negotiating the final deal value, and then the task of ensuring that all the legalities are properly managed and signed of etc etc.There is, of course, the short-term elation when the deal is finally closed and ink is dry but it's short-lived, because before he can draw breath, that CEO is now faced with achieving the strategic vision, value, and synergies that were part of the deal thesis and a promise to the board and shareholders alike. Here's to another year of stresses that are stopping him from doing his day job.Well as Toby puts it, there is some relief that can be gained if the CEO approaches the post deal activities by asking 5 simple questions.Who is the integration manager for this dealAre they appropriately skilled and experienced for the task at hand?Is there a clearly defined integration strategy and plan?Who is managing the myriad of synergy opportunities that have been identifiedDo we have a strong governance program to keep everything on track?From Rob's point of view, these questions might come over as too simple, but in reality, they are the foundational questions that any CEO must be comfortable with if he/she is going to deliver the post-deal promise to the board and shareholders alike.And the final point in all this is that the CEO must not wait until the deal is closed before he tackles these questions. He should be thinking about these as soon as due diligence is underway. In fact the earlier one can consider these 5 important questions, the better.
Well, this podcast was recorded in late November 2022, but a quick hospital visit so Rob could undergo full knee replacement surgery meant that we didn't publish until early January 2023. Still, knee surgery was successful, so here goes. And to help you navigate this episode, we refer to past episodes where we unpack some seriously disastrous M&A transactions, so if you want to know more about the detail of each of our 'top 5' then you'll find the links hereTwitter HP and Autonomy Daimler Benz and Chrysler Alcatant Lucent Royal Bank of Scotland In past episodes, Rob and Toby walked through a number of disastrous M&A transactions and a number of common factors started to arise on why these transactions had been so catastrophic. In some cases, it was down to the massive ego of the CEO or Chairman who railroaded transactions through a compliant board. In others, the deal thesis appeared to be nothing more than an excited scribble on a table napkin and very little thereafter. Others came down to massive cultural challenges or the simple reality that the idea might have sounded good, but the market wasn't interested. And in some cases, it was a combination of several of those factors. Do you agree with our 'Top 5' or do you have other examples to offer? And if you want to delve more deeply into each disaster, you'll find that we dedicated an episode to each of our top 5 so simply look through our episode history to find out more.Oh, I almost forgot. HAPPY NEW YEAR to our friends, colleagues and listeners around the globe. Here's hoping 2023 is a safe, healthy, and prosperous year for everyone and that your friends and family play a key role in every aspect of 2023.
In this 2nd episode with PTS Consulting, we pick up with Barry Lewington and Hugh Van Wijk where we left off. but take time to delve deeper into some of the critical success factors in managing technology transition or transformation during M&A.Seasoned M&A professionals won't be surprised the hear that technology itself isn't the most important element. In fact it doesn't appear on Barry and Hugh's top four recommendationsBe involved from the beginning and make sure you have an advisors seat at the leadership tableMake sure that you are a contributor to the deal thesis, not jut someone who receives a 'fait accompli' from the board or operating leadership.Have the personal presence and expertise to operate (and communicate) at all levels from shop floor to Exec Suite to Boardroom.And always follow the guiding principle of good project management PLAN for successful outcomes, PLAN for expediency and efficiency and PLAN to be on time on budget.I'm sure we will hear more from Barry and Hugh, in fact there are rumours they may record a podcast episode every month. Watch this space.About PTSPTS offers clients a personalised service to transform their operations through technology. We combine visionary thinking and strategic guidance with innovative design and practical implementation to ensure technology transforms, engages, and optimises.
In today's episode, I'm joined by Barry Lewington and Hugh Van Wijk from PTS Australia to talk about their experiences in managing the technology integration (or separation) aspects of M&A.   We will be recording more podcasts with PTS in the future but from today's episode, there are several takeaways from our conversation.Technology integration can be a large part of any M&A integration and in most cases, it can be complex and involve many moving parts.The technology per se is a small part of the issue, people, governance, data and operations security, transition services agreements (TSA's) and regulatory approvals are some of the critical factors that need to be considered.Like all other parts of M&A integration, the technology aspect needs detailed planning and the most appropriate starting point is the deal thesisIn addition to technology skills, strong communication skills are a vital skill set to make sure everyone understands what's happening. how they are involved or impacted, and as a mechanism to provide assurance to all parties.And finally, in today's environment, technology is a critical component of business, so a critical expectation that PTS encounters is that when a system transition or integration legally completes at midnight, all operating systems have to be up and running in the new environment at midnight + 1 second.  About PTS PTS  is a global technology consulting business with 35 years of experience delivering world-class IT solutions to some of the world’s leading organisations. They help clients better align their IT, Business and Real Estate strategies by transforming the workplace through technology and by optimising their Data Centre environment.
In today's episode, Rob and Toby continue the conversation about 'infusion', the art of purposely planning the deal as a value-add exercise and being committed to adjusting your operating model to 'infuse' the best of both sides. Rob and Toby kick off by proposing that traditional integration is what we refer to as 'scale deals' ie: bolting two entities together so the end result is more efficient, but principally a larger version of the two originating parts. Scope deals on the other hand are about setting out to 'fuse' the best parts of each business so as to produce a 'new' organisation that is stronger than before and is now able to capture new geographies, enhance design capabilities or perhaps add an entirely new product range or service. These deals are about infusing those things that each organisation is exceptionally good at and maximizing the advantages via a willingness to adjust the operating model appropriately.You can listen to what we say about this, and we also recommend you read a well-written article from Strategy+Business entitled 'The Capabilities Premium in M&A'. Highly recommended reading.
Well, Toby's back from his quest to conquer Spain and Malta, and he's fresh with renewed enthusiasm. So much so that he has invoked Alice in Wonderland and Alice's conversation with the Cheshire Cat to demonstrate his thought processes. I'll let you, the listener find that delightful snippet.In this episode, Rob and Toby revisit a familiar theme that proposes that the outcome of any M&A deal must be greater than the sum of the two individual parts. We start by looking at traditional M&A integration of "bolting things together" and surmise that this results in diluting the outcome. By contrast, a deal with a clear vision that takes both a finance and engineering approach will always deliver more significant, more sustainable value. Why? Well, R&T argues that the duality of a financial and engineering approach to M&A infuses the best value for the two sides of the deal, and with the snap of a finger, INFUSION-type deals are born.But it's not as simple as it sounds. Rob and Toby have determined to give it more thought, so if you are wondering what the topic of our next podcast might be? Think no more!
With Toby on vacation in Europe, I've had the opportunity to bring in a guest to the podcast, and I'm delighted that fellow M&A professional Anirvan Sen has joined me to talk about his experiences managing cultural change in M&A environments.In today's podcast, we unpack our thoughts that culture is a leadership responsibility and that it is the culmination of many different aspects that make up corporate culture. Everything from rewards and recognition, communication style (internal and external) your approach to innovation, and lots more.  So much so that Anirvan and his team have developed a diagnostic and operational model with the well-chosen acronym P-R-O-M-I-S-E. Listen to today's episode and you will understand more about PROMISE and the many facets of managing culture during M&A transactions and subsequent integration. About Anirvan SenAnirvan is the Founder and CEO of Fifth Chrome a leading consulting and advisory firm specializing in programs that focus on the 5C’s: Capable leadership, Change Management, Communication, Cultural Transformation, and Collaborative Technology.Fifth Chrome's transformation programs are based on Mergers & Acquisitions (M&A), Internal Organizational Restructuring, Future Talent Strategy, Outsourcing, and Digital Technology Adoption. 
In the last episode, we delved into Rob's background and how he got started in M&A. The tables have been turned, and it's Toby's turn to wallow under the spotlight.We learn quickly that Toby's first M&A experience was after joining a Financial Services business and leveraging his project management expertise. And he realized this was something he enjoyed doing because it allowed him to utilize his skills and expertise across the whole of the business. As Toby puts it, he became bilingual and could speak the language of every department at every level.  Toby also enjoyed the freedom and flexibility of moving seamlessly up, down and across the organisation as part of the M&A execution process, unfettered by internal barriers and politics.Fast forward, and Toby has completed 50 M&A projects, half pre-deal, and the other half post-deal. He feels privileged to have had this opportunity across his career, and he doesn't envisage slowing down too much while he is enjoying himself. 
The dynamic duo aka Rob and Toby have spent many episodes talking about their respective M&A experiences, but we've never talked about how it all started.  Rob is slightly embarrassed about opening the kimono, but as he explains in this episode, it started with his ability to regularly be in the wrong place at the right time. By that, Rob means that he was often asked to pick up 'special' projects and didn't know how to say No.But if you listen to this episode, you'll quickly understand that Rob's start in M&A was a two -way transaction.  His willingness to "have a go' when asked to take on projects parallel to his day job, coupled with the willingness of senior executives to provide support and coaching.And it's possible that Rob would not have been here today to talk about M&A if it wasn't for his very first experience and the willingness and coaching of a very well-known British industrialist.So in reflecting back over the years, Rob provides the following advice for anyone looking to start a career in M&ABe open and approachable to senior people looking to resource those 'special projects'Be prepared to stick your neck out and give it a goIf you're a senior executive looking for resources, make sure you allocate time to coach and support the journey.
So in today's episode, Robert and Toby continue their conversation around value creation in M&A, but this time taking a more philosophical approach to the factors that impact the desire to go after value that is beyond what Rob defines as the 'bleeding obvious'By 'bleeding obvious' Rob is alluding to the usual synergies, cost reductions, and efficiencies that result from typical M&A deals, and whilst achieving these can be stressful on the organization, the pathway is based on proven methodologies that are well trodden.But then there is the innovative value that can be derived from M&A and in many cases that area has a lesser pursuit. Why is that?Robert and Toby ponder whether it's because the organization is exhausted after dealing with the post-deal shenanigans or whether CEO's are risk averse and don't want to push value creation too strongly at the risk of their performance bonuses etc.But maybe it's determined by the 'style' of CEO at the helm. Some are clearly focused on delivering consistent performance, whilst others are more 'entrepreneurial' and willing to take greater risks.And maybe it's just that two teams are needed. The initial team that goes about achieving the bleeding obvious, with a second team swinging in slightly behind team 1 to pick up on the more creative/innovative themes and drive that additional 'buried treasure' that Toby often refers to?The answer will always depend on many factors, and in fact could be a combination of all three scenarios that the dynamic duo talks about, but the fact remains that many deals stop at completion of the integration phase, and a lot of additional value creation remains buried.What do you think? Have you got examples where that elusive innovation value has been uncovered? Do you want to come on a future podcast episode and talk about it? Let us know - you know how to find us. 
You might recall in the last podcast, that Robert and Toby got on a roll in talking about value creation during post-M&A integration so you won't be surprised that this is the topic for today's podcast.The Dastardly Duo hold firm to their belief that insufficient attention is paid to real value opportunities beyond what Rob describes as the 'bleeding obvious' And you'll hear Toby berate Rob for not respecting the huge amount of work that goes into identifying value opportunities.But I digress because in this episode Rob and Toby start to explore what they call the Three Phases of Value Creation and reaffirm their belief that more can be done to realize post-deal value. Moreover, Toby proposes that there is an additional function needed that he calls the VMO (Value Management Office) and you can read more about that idea hereAnd finally, what are those Three Phases?Value Protection: Taking action to make sure that the value identified in the deal thesis is fully realized and that mistakes or poor decisions don't arise that would erode value.Value Creation: Which is what Rob refers to as 'Bleeding Obvious'. This is the value derived from synergies, operating efficiencies, cross-sell and up-sell potential, organization restructure, and systems/process efficienciesAnd lastly Value Innovation: The opportunities that present themselves once the two entities have been integrated and the combined strength of the whole opens up previously unseen potential. As always, we hope you enjoy our podcasts and we invite you to comment if you have something to offer or indeed disagree with our observations. Lastly. let us know if you have a story to tell and we would be delighted to have you on the podcast as our guest.
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