Anthony Webb, Building Great Workplaces and the Secrets of Successful Acquisitions
Today’s guest highlights the importance of trust, empathy, and understanding in fostering meaningful experiences in the workplace. He also discusses the keys to successful acquisitions, how to avoid common mistakes, and how to create post-acquisition strategy.
Anthony Webb is a mergers & acquisitions lifer, licensed lawyer, venture capital investor, servant leader, and engaged father.
Currently, he works in Corporate Development and M&A Integration for Adobe.
Today’s guest highlights the importance of trust, empathy, and understanding in fostering meaningful experiences in the workplace. He also discusses the keys to successful acquisitions, how to avoid common mistakes by acquirers, and how to create post-acquisition strategy.
Anthony Webb is a mergers & acquisitions lifer, licensed lawyer, venture capital investor, servant leader, and engaged father.
Currently, he works in Corporate Development and M&A Integration for Adobe.
Anthony shares what makes work most meaningful to him, from being given the opportunity to solve complex problems, to building great team environments, to driving tangible results by empathizing with others, understanding their objectives, and providing supportive leadership.
Through a personal experience, Anthony illustrates how creating safe spaces allows trust to be built, in turn paving the way for effective communication. To empower your organization’s “culture carriers,” it is vital to create a space where ideas from both sides can come to the table, promoting innovation and better decision-making.
Asked what goes into a successful M&A, Anthony unpacks the concept of excellent end-to-end execution. It starts with creating a crisp corporate strategy, followed by homing into the target space, then getting the right people to the table for diligence, and, finally, building an integration strategy and approach.
Anthony explains that divesting businesses gave him a new perspective that allowed him to understand what to look for in an acquisition. Drawing from these experiences, he provides insight into the often unpleasant surprises that occur during acquisitions and offers strategies on how to avoid them, chief among them being the consequences of being overly optimistic and simplistic in a deal.
Anthony discusses the importance of knowledge retention and being sensitive to the motivations of the target company’s employees. Building trust and openness, according to him, leads to better acquisition outcomes.
Anthony shares how simply attending routine meetings of the acquired company during a several-month “stabilization period”—allowing all voices to bring ideas to the table—allows acquirers to learn and gain more value from the acquisition for the long-term.
Amanda Setili (00:05):
We all want to do work that we love, and as leaders, entrepreneurs, and employees, wouldn’t it be great to create workplaces where work feels like play, where people are tuned in to the changes going on in the world around them, where they’re constantly learning, spotting new opportunities, and taking action to go after them. I’m Amanda Sat, and this is the Fearless Growth Podcast, where my guests and I will explore the mindsets and choices that lead you and your organization to outstanding performance. My guest today is Anthony Webb. Anthony is a mergers and acquisitions lifer. He’s a licensed lawyer, venture capital investor, servant leader, and engaged father. Currently he works in corporate development and integration for Adobe. Welcome to the show, Anthony.
Anthony Webb (00:55):
Thank you so much, Amanda. It’s a pleasure to be here.
Amanda Setili (00:58):
Yeah. So, as you know I really enjoy focusing on what makes work meaningful for folks and how we as leaders can help them have a meaningful and fulfilling work life and home life and what we can do as employees to just make life and work more fulfilling for ourselves. So I just wanted to start with that basic question. What, what makes work most meaningful for you?
Anthony Webb (01:24):
For me personally, Amanda, it comes down to several things. Number one, solving complex problems. I really enjoy using all of my skills when I engage at work that allows me to, to really reach my potential. So that would be one. Building great team environments. You know, I learned at an early age that I enjoyed winning together, and I appreciated having a shoulder to lean on when, when results were suboptimal, let’s say. So building great team environments, allowing everyone to reach their potential within a team is something that moves me greatly. And finally, driving tangible results. You know, we do our work to position our companies, to position our people to be at their best. And so knowing that we are, we are problem solving and developing great team dynamics, all in the name of identified results that we’re trying to reach and that are attainable allows work to be really meaningful for
Amanda Setili (02:30):
Me. Yeah, those are three really good points. Being able to use your skills and build your skills, I think is really important. And then just having a team that you trust and that you enjoy working with, that it’s
Anthony Webb (02:41):
Amanda Setili (02:42):
You, you know what they can do for you. They know what you can do for them. You’ve kind of all got each other’s backs and you’re working as an integrated whole is so important.
Anthony Webb (02:51):
Amanda, you really said something powerful there. You have each other’s back, right? And so really thinking through what supporting other people on the team looks like, no matter everyone’s a leader, right? So it doesn’t matter who the leader is on the team and things of that nature. Really thinking about being empathetic and understanding the positioning of other people on the team and what not in a selfish way, but what winning looks like for them also, so that we’re all in support of reaching each other’s, like personal goals and also the goals for the team that allows it to create some really powerful dynamics that can be meaningful.
Amanda Setili (03:33):
It’s so interesting because what you said about what are people’s personal goals when you see a work setting that’s not going well, <laugh>, where people aren’t getting the results, where they’re not feeling that they’ve got a cohesive team mm-hmm. <Affirmative>, it’s usually because someone is not being empathetic. And it’s not that they’re like a I don’t know, a selfish person or whatever. They’re just not bothering to ask the questions a lot of times. Like, what do you really want to accomplish here and how can I help you?
Anthony Webb (04:04):
Well, those questions reflect a level of maturity of, of personal and mostly emotional maturity. That’s really critical. I know I was, you know, in the, I was 10 years into my career before I really started the work, thinking through how to build deeper relationships, what my love languages are mm-hmm. <Affirmative>, and how to engage with other peoples love language. And just thinking of it from the perspective of how do people receive information, how do I ask questions that are really meaningful the same way, the same way I would as a consultant or as a lawyer mm-hmm. <Affirmative> or just every day as a business leader, we, we, the first thing we do is ask questions to understand the context of the business on which or for which we’re working. It’s the same with people. Mm-Hmm. <affirmative>, understanding context, personal context, professional context allows, I’ll make an eye statement, allows me to be better positioned to be a good teammate. And when and when I’m able to do that, selfishly I get more out of the relationship and out of the time that’s being invested in the work that’s being done. And it just, it really fills my bucket.
Amanda Setili (05:11):
And so many times, I think the misunderstandings or, or failure to, to act cohesively is really designed into the system kind of Don’t you, don’t you think like the incentives that you know, Sally has or Joe has when they’re working with me, are different than my incentives? Their skills are different. What their boss is telling them to do is different. And so a lot of times we’re just not asking the questions to say, where’s the common ground here?
Anthony Webb (05:38):
Exactly. One of my professors at Yale School of Management used to call it the double loop. And so what she was describing was looking at a situation and saying, okay, I can engage with this situation just like this. Right? And it would be from a, from a reasonable person perspective, it would be the right way to engage with this situation or this reaction is quote unquote fair based on the information in front of me. But when I started really engaging with what she, she described as the double loop, it was, okay, what’s the broader context going on here? What are we trying to accomplish? And how do the parts add up so that we are well positioned to accomplish the goal? Right. And when I, when I personally started thinking in that manner, it al it allowed me to engage in a way that was so much more meaningful for myself and everyone around me. That work became something different. Mm-Hmm. <affirmative>, it stopped being work, Amanda <laugh>, it started being a passion project for everything that I do. And so this ability, and it’s not even an ability, some of it is an ability, but it’s really a willingness to craft environments that work for myself and, and caring enough to understand what works for other people. I found that that’s the best path to success for everyone. Do
Amanda Setili (07:05):
You ever encounter a situation where you hit some kind of brick wall where you’re trying to explore the person’s motivations and desires and intent and they’re not giving it to you? They’re <laugh>, they’re like not willing to go there with you?
Anthony Webb (07:21):
Absolutely. I can recall my first GM role. I was running a business that was in a very difficult place. It, it was, it was business case 1 0 1 for everything that could go wrong with a business. We had warranty issues, we had culture issues, we had financial performance challenges. We had tough relationships with our customers. There was a lot of internal strife. And I had a particular employee who had just great retention of knowledge of the business, great history inside of the business. And he was, and is an incredible human being, but he was shut off from me. Hmm. And I didn’t understand why he was more established than I, so he was a more established professional. He was older than I mm-hmm. <Affirmative>, and he was my number one basically in the business. And so I depended on him greatly because I was walking into a particular portion of the business that I did not know well.
So I was on a learning journey, and my, my ears were open and my heart was open to learn, but I could not get through to this person. And I was like, maybe it’s just an approach that I’m taking or what is going on here? What I ended up finding out, Amanda, after I created safe enough spaces consistently where this person felt like he could trust me, what I found was so many promises had been made to him and broken. Mm. And the, and the, the cultural decay of this business had impacted him so deeply because he saw the employees as his family, every single one from, from the shop floor to the janitors, to, to the leadership teams. He felt a deep connection with everyone. And in some, in, in some ways, he felt like he had let them down as a leader.
Mm-Hmm. <affirmative> and opportunities that had been promised to him were just never fulfilled. He was not given a chance to really reach his potential. And so maybe after three or four months of doing deep internal work, because anytime I take a role, Amanda, the first thing I do, and you being a high level consultant, you know how this goes, right? I think like a consultant, I’m going to come in and act like I, I know absolutely nothing mm-hmm. <Affirmative> and I want to build from the ground up. And when I lead a team, the first thing I do is have all of us build out a, basically like a business case. What’s happened with this business over the past five years from an integrated problem solving perspective? What’s going on from an HR perspective, a financial perspective, from a general performance perspective, what’s, what are the dynamics in our market?
And it allows people to not overlook information and not take things for granted. And so when we were able to accomplish that before we presented it out to the c e o of, of the company, we were able to really review it deeply internally. And that work really opened this individual up. And so I started to learn more about his pain. Frankly, he was in pain and he had such a high level of distrust. So once he confided in me and said, Hey, I’ve been treated like this. Multiple people have been treated like this. Our culture used to be so beautiful, and it has been really ugly lately. Everything is a fire drill. People do not trust each other. We need to, we need to rebuild from the ground up, thinking through how we engage as a team. And once he did that, I made a promise to him to say, Hey, you will have a fair shot on goal.
I see the potential in you, and if you do what you are supposed to do as a leader and fulfill the obligations of your role, you will get the opportunity to continue to move your career forward. And within seven or eight months, he moved up a complete level and took a, a broader leadership position in the business. And because I, I lived up to that word, other people saw that. And so the trust that it built between he and I was one thing, but the trust that it established across the entire leadership team and inside of the business was huge. And I didn’t even recognize it as fir at first, but this person was a culture carrier inside of the business. So I was just doing what I thought individually was the right thing for someone’s development. Little did I know I was doing the right thing for the business and sending a message unintentionally of, Hey, people are going to be treated better, fairly, you’re seen, you’re heard, you’re loved here, and we’re all working together to make this business better and make each other better. And it, you know, we were able to, I was able to break down that wall. Well, we broke it down together. Mm-Hmm. <affirmative> he and I. So that was a powerful moment
Amanda Setili (12:17):
For me. That’s a fantastic story. It sounds like he was viewing himself sort of as the protector of the other people in the organization in a sense, like the first, the first on the front line to <laugh> to make to, and to make upper management hold their promises. It also sounds like he was sort of the keystone to the whole, you used an interesting word to culture carrier. But I’m thinking of it as that keystone in the arch, like nothing hangs together unless he’s there. Yes. And you were able to win him over by I guess patience and empathy and asking questions and being thorough and a long, slow process.
Anthony Webb (13:00):
Absolutely. And live and living up to my word. Yeah. Right. So it wasn’t just, Hey, if we just, if we’re able to hit it off, then this is how your career is going to move forward. No, we laid out a, a plan together mm-hmm. <Affirmative> to say, here are the, because through that initial work that I described, Amanda, you get to know about people’s skillset as well mm-hmm. <Affirmative>, and you learn about your own skillset. And so I was able to see areas that, for his position, he was, he was a customer savant. Customers trusted him implicitly. Okay. They, they loved him. So he was in the business for 15, 20 years before I started working with him. And so he was deeply customer focused. He needed to be able to think more like a general, like a general manager mm-hmm. <Affirmative>. So I put him in positions to build those skills. And so in the process, as he learned, I also learned. And so we were able to grow together and walk in that path together. Builds trust,
Amanda Setili (13:55):
You know, that you just coined another term, which I love customer savant. And often those people who have such a deep relationship and understanding of the customer are also very protective of the customers. And so, absolutely. You know, I think with the warranty issues and quality and stuff that you spoke of early in your story, that must have just killed him. Like, there’s nothing that disheartens a customer focused person more than not being able to serve the customer.
Anthony Webb (14:27):
Absolutely. He felt like every day he picked up the phone and received a customer call, that he was not fulfilling his obligations to the customer. And this is a very family oriented person in his personal life. Mm-Hmm. <affirmative> a beautiful family, beautiful human being. And he, he is the type of person that’s very similar to me. How I am in my personal life is how I am at work. Mm-Hmm. <affirmative>. And so that consistency has allowed me to have kind of mental and emotional peace. And so we bring those same values. And so holding his word was incredibly important. And so we, the, one of the first things we did was how do we resolve the issues to get our customers back to square, right? Back to level set to being in a position where they understand what we are doing to resolve the issues, and we’re walking them down a path.
That path may take six to eight months. We need to find a new supplier. We need to, you know, make people whole for challenges that they’ve had. Right. These things all take time. Mm-Hmm. <affirmative>. But when he was able to get on the phone and say, Hey, I hear you, and here’s what we’re going to do. Right? And, and, you know, three weeks in, four weeks in the calls keep coming and, and he’s able to show progress. I saw a different employee. I just saw a different human being. And he was really in his element at that point. And once the trust was built, he was all in.
Amanda Setili (15:58):
He sounds like a person who really hates letting people down, both other employees and customers. And the fact that he was not able to probably uphold his promises in the past just made him sour to where <laugh> you had to prove yourself before he was willing to trust you, and you did a good job.
Anthony Webb (16:17):
Absolutely. And, and this is my first time being, this was my first time being a general manager. You know, anyone who looks at my background will just say, oh, look at his education. It’s just some young, you know, young guy coming in here with all of these ideas mm-hmm. <Affirmative>. And so I, my, my mother rest in power used to always say, and Amanda, I’m sure you’ve heard the saying and probably used it right. You have two ears and one mouth for a reason. Use them in that proportion. <Laugh>. <laugh>.
Amanda Setili (16:43):
That’s right. That’s
Anthony Webb (16:45):
Right. And so I walked in listening. I didn’t have all of the answers. And I, and I had made that mistake in working with my parents when I first graduated with business from business school, I had all of these ideas regarding their business, and I did not think through how to present those ideas in a way that we were co-creating. Right. That we were sharing them and pressure testing them. I was pushing them. I was advocating, I was being a lawyer instead of a, instead
Amanda Setili (17:08):
Of a business. Suddenly you were the know-it-all. Exactly. <laugh>. And they’d probably tried all those ideas before <laugh>.
Anthony Webb (17:14):
That’s it. Right? Yeah. And so really taking a step back and just asking questions and really thinking through creating a space to build together, it, it turned out to be just really powerful. And we saw great results in the business. I mean, we pushed, we pushed EBITDA within, within one year, we pushed EBITDA up to very respectable levels, over 15%, which was great for that particular industry. And we were able to keep the overwhelming majority of our customers. We resolved all of our warranty issues, you know, but were able to do it as a team. That’s the key. Mm-Hmm. <affirmative> people let the charge, I just helped bring them together in a different way.
Amanda Setili (17:56):
Fantastic story, by the way. What kind of business do your parents
Anthony Webb (17:59):
Run? They had full-time jobs their entire career, and they also had a family business for affordable housing in real estate. Residential real estate. Yes. Very good. Very good. So when I graduated, Amanda, my wife and I got married, and then we actually lived with my parents for like six weeks. And my mother, while I was in business school, had to file for bankruptcy. This was right after the crash in 2008. Mm. They got hit hard. They were not deeply finance oriented people. They just needed a, they just needed a fresh set of eyes and some new skills. Mm-Hmm. <affirmative>, and I’ll tell you, I’m the third of three. Okay. So my parents were older when they had me. They were not expecting me. And so my parents were in their sixties at this time. Mm-Hmm. <affirmative>, but old dogs can learn new tricks. And so watching them evolve over time and thinking about personal finance, budgeting, systems, processes, just watching them over time lean into these, into using technology and to these new ideas was really special.
But I had to take a step back and figure out how to connect with them in a different way and, and how they received information. So all of these things are consistent, right? This is, this is, and this is going back to the point, Amanda, I believe in being consistent across any environment. I show up as my authentic self. Mm-Hmm. <affirmative>. And that authentic self needs to massage maneuver. Right. mold the manner of engagement in a way that is meaningful for the audience. Right. And that’s an, that’s been an important part of my personal development, is just caring enough to do that.
Amanda Setili (19:38):
Right. And that’s why you’ve been very successful. All right. So on mergers and acquisitions, which is really your, your, you said you were a lifer, and I know that you have just super deep expertise in this area. I work with a lot of different kinds of companies, and I often am hit with companies who are like, we need growth, we need growth, let’s acquire, or we need technology, we need technology. Let’s acquire. Or we need an entrepreneurial mindset. We need innovative minds. Let’s acquire. And so often it doesn’t work out. They do acquire the company. They might overpay, they might not, but in the end, they don’t get the value that they expected. And this is statistically true as well, which I’m sure you know, but you’ve been successful with m and a. So tell us the secrets. What do you think are the key success factors for a successful integration that really gets the value that the company is looking
Anthony Webb (20:33):
For? There is, in my humble opinion, there is one thing that really drives success more than any other, but it is a very complex phrase that has a lot of subparts. So that one thing is excellent end-to-end execution, Amanda. And so, what do I mean by excellent end to end execution? M and a starts with corporate strategy. Okay. And so, thinking through where we want to play, why we want to play in those spaces, right? Just really being thoughtful and being able to do the work around understanding different environments or being better inside of the spaces in which, you know, we as a company are already playing. Like you said, we may need tech, we may need talent, we may need geographical expansion, whatever the case may be. Being really thoughtful and doing the, the kind of deep research that needs to be done to understand the spaces and be thoughtful about the spaces in which we want to play.
That is such a key first step because it is the basis of the rest of the execution of the process. So you start with really crisp corporate strategy and being, and having strong conviction around the areas in which you want to play. Next, you move into, okay, here are the spaces, here are the different things. We, we, we believe that we need. Now how do we acquire those, right? So you understand the space. I want to move into X space. Now what are the companies that play in that space? Why may they be interested in, in selling to us? Right? What do we bring to the table that would exci excite that founder or that seller? And so w moving from corporate strategy to honing in, in the space and understanding targets and understanding their context is really, really important. Right? So those are, those are kind of the first two steps mm-hmm.
<Affirmative>, once you engage that business or those businesses, right? Because you, you only win a, it’s a hit rate. You, you’re only going to move so many companies through the funnel. But once you really identify the businesses that you believe could be good partners in this process, then it’s all about how do you get the right people at the table for diligence as soon as possible, right? And so you don’t want to start out, you know, pre LOI with a huge team, cuz that is just expensive, even if it’s your own internal resources. But how do you think through how to begin with the end in mind where you have this great deal thesis and now you’re saying, I’m looking at this company and to be able to extract value and build additional value. Who do I need to have at the table to make sure that we’re able to actually reach that and we’re not just getting lost in a spreadsheet and taking an academic exercise. And so you’re
Amanda Setili (23:29):
Talking now just at the due diligence phase.
Anthony Webb (23:31):
I’m talking now even pre l o i, letter of intent, right? Mm-Hmm. <affirmative>. And it’s really, when you first engage, before you even submit an LOI for a negotiation, there is work that needs to be done. And, and you want to, sure, I’ll make, once again, I statements. I like to make sure that our valuation is as thoughtful as possible, but you have to think about what’s going to happen post-closing when we come together, and what are the key things we need to make sure are on the table that can add cost that may take longer than we think. These are all areas that are really important to think about. And so we’ve, we, we’ve thought about our, our clear deal thesis. We know the spaces that we want to play. We, we are getting the right people at the table for preliminary diligence. You know, you want to be really thoughtful going through going through confirmatory diligence.
And then it comes down to, okay, now we understand this business. We’ve bid on it, we have a chance to win it. We’re going to sign definitive documents. Along the way, you’re building an integration strategy, so now you’re converting from deal hypothesis to how do I make this real when we come together. And so that’s a really important, important step. And now we’re getting into, is this a tech and talent deal? Is this strictly a geographical play? How do we support this business to help reach its goals so that it ultimately reaches the goals of the full business together. Mm-Hmm. <affirmative>, the combined businesses, the integration strategy, and really thinking through the levers that are going to allow, allow that business to be a success. Thinking through that early is really critical. Right? And out of the integration strategy, I believe the next step is the integration approach.
Now, hey, we have the integration strategy. Here are the levers that we’re going to do. We’re going to increase salespeople in this particular area. We need more engineers so we can manufacture at this level, whatever the case may be. The integration approach allows you to start thinking through operating model, right? And, and really how you are positioning people in technology to reach those goals and in what period of time. Right? And then ultimately it’s comes down to executing the approach. But the key step in there is a lot of that is being done internally by the acquirer through most of that process. But the minute the deal closes, the most important thing I have learned is being able to sit down with the, with the target’s leadership and pressure test these ideas with the target mm-hmm. <Laugh>, because it needs to be a co-creation. Yeah.
It’s great to have preliminary ideas, but the target leadership knows their business better than anyone. They built it. Right? And so making sure you have that buy-in and the feedback to make the idea the most meaningful and impactful that it can possibly be is a key step. And now you’re take, now you, you’re starting to shape a process that’s building the next level of teamwork. Now this is really true for, you know, you have businesses that are incredibly large, huge tech businesses. They will suck up, you know, acquire companies and just throw them into a system mm-hmm. <Affirmative> because they can, you know, right, right. Most of the time the money is not even rounding error to them mm-hmm. <Affirmative>. But when you are building a business, when you are, you know, sub a hundred billion in revenue, sub 50 billion in revenue, whatever the case may be some of the companies we were one to 2 billion in revenue.
Mm-Hmm. Especially when you’re in that phase and you’re really trying to grow this more tailored approach in developing and learning and co-creating is really, really valuable. If you’re able to reach that, you, things may take a little longer, so to speak, but the acceleration, when you come together and you really start executing the approach, the probability of reaching the goals I’ve found is just exponentially increased. And that’s what it’s all about. Right? Especially if you’re a public company, you’ve made a promise to the market and to investors that you’re able to execute well. And so you want to be able to move in a timely fashion, but also increase the likelihood that you’re able to capture the value from the deal thesis.
Amanda Setili (27:28):
So are you saying that you don’t have a detailed conversation with the leaders nor pressure test your ideas until it closes?
Anthony Webb (27:38):
It is very, I think that is a rule of thumb. Mm-Hmm. <affirmative>, it depends on the relationship with the target. Sometimes I have found that the, the two sides are so in lockstep and, and things can be so open that pre-closing, you’re already thinking, you already can throw out some ideas on what working together looks like mm-hmm. <Affirmative> and it doesn’t throw people off. Mm-Hmm. <affirmative>, that means probably the acquired company has really, has really well prepared to sell their company. And so the confirmatory diligence phase is, is particularly smooth because they were just extremely well prepared. And being on the divestiture side, I’ve written the playbook <laugh> mm-hmm. <Affirmative> on thinking about divestitures and how you get in that position. So you’re able to focus a little more on what does coming together and actually working together look like post-closing. And you’re able to extract some of that information early. But many times that’s, you know, that’s not necessarily on the table. And confirmatory diligence really needs to be focused on, you know, confirming the understanding of the company, confirming what you understand with customers, confirming the financials, you know, understanding the, the, the legal kind of obligations of the company. Just you’re, you’re watching out for landmines, right? And so that’s where a lot of the energy is. So a lot of the integration work really has to be internal until you get to closing when some of the pressure is taken off.
Amanda Setili (29:05):
So are you saying that because you need to make a decision quickly and you can’t spend infinite resources during the time leading up to the close, you need to focus just on the basics, legal, financial, customer, whatever else. And that’s the reason why you’re not really getting in there to talk to the leaders about what happens post-close.
Anthony Webb (29:24):
Agree. Because it would be overwhelming. Okay. And you don’t want to lose them in the process. Remember if someone’s trying to sell, generally, not all the time, but generally they thought about this for a while. And so you may not be the first person on the block that they’ve talked to. They may have been under diligence prior to you. They could have been in a process for 6, 8, 12 months. That’s exhausting to have people asking you questions and picking you apart for that long mm-hmm. <Affirmative>. So it’s very important to understand where they are as human beings and figure out the proper timing to be able to engage with certain types of questions.
Amanda Setili (30:00):
So, so it’s partly that there may be other people competing for this deal. And so you need to just get the basics right, get your offer on the table and see if it closes. Cuz you may be courting more, more than one company also. And once it closes, then it’s worth their time and your time to take it a level
Anthony Webb (30:20):
Deeper. I think my preference is to go a level deeper, but it’s an internal exercise. Hmm. I, I believe that in any deal we should be thinking about operating an integration early in the process. Mm-Hmm. <affirmative> an inclusive process that’s really thinking about the end-to-end execution of the deal. And so having really good partnership between corporate development and integration is critical. Mm-Hmm. <affirmative> at some companies, I’ve been at companies where I was the end-to-end leader of the deal, <laugh> all the way through integration mm-hmm. <Affirmative>, and then at larger companies, they can be separated out. And so it just really depends on the dynamics, but I believe the best practice is to think about integration at the very least internally and make sure the proper subject matter experts are thinking about operating the acquired company post-closing early and that way, very worst case, you have thoughtful decently baked ideas that you can share with the target leadership mm-hmm. <Affirmative> post-closing. So it doesn’t feel like you’re, they’re starting from scratch and thinking about it, but they are a part of the co-creation process.
Amanda Setili (31:26):
So how often have you observed getting in there post-close and getting some surprises, some unpleasant surprises, <laugh> and what are those? Usually?
Anthony Webb (31:36):
I would say at least 40% of the time, you know, you, I’ve seen some type of unpleasant surprises because you just, you never know fully what you have until the deal closes. No matter how great you are at diligence. Since around 20 16, 17, when I really started focusing on how to execute deals well, especially when I moved to the, to the divestiture side and started divesting businesses, I learned more about what to look for. Right? People think acqui only acquisitions are so sexy, you know, and acquisition is an integration of businesses. A divestiture is a disintegration mm-hmm. <Affirmative> and learning how to untangle something allows you to be more thoughtful around bringing, you know, two businesses together. And so I have found that over the last call it five or six years deals on which I’ve directly worked. In the end, we have been able to avoid huge surprises after the fact because we know the types of things to look for mm-hmm. <Affirmative>, because we’ve been so thoughtful about divesting our own businesses and how to position buyers. Because when you do a good job preparing a business for divestiture, you increase the chance that people keep confidence that a potential buyer will keep confidence in the information that you’re sharing. And that increases momentum, which typically ends up increasing, you know, the value you can get for the business. Right. If people have a bunch of questions, then they start questioning you and the first piece of information you shared looks sloppy and not well put together. And maybe,
Amanda Setili (33:13):
Maybe it gives the wrong impression, it
Anthony Webb (33:15):
Gives a terrible impression, Amanda. So I’m going to automatically start thinking of ways that I can ding you right. To get better value because you’re not organized. But if you’re well organized, if I’ve, if I’ve preliminarily done a phase one, if I have a manufacturing company, I’m like, here, I’ve already run a phase one, feel free to ask the third party, you know, supplier or vendor questions. If I’ve already laid out a data room that is incredibly thoughtful mm-hmm. <Affirmative> that a definitive agreement can be built off of very easily, these are things that show a buyer that you’ve been incredibly thoughtful. So when you are buying, I’m looking for those things and I’ve just seen, I’ve seen so many dead bodies from the <laugh>, from the divestiture perspective, I have a good suspicion of where to ask questions on where things can get tripped up.
Amanda Setili (34:03):
But let’s say someone is not as talented as you are at m and a and they’re on the acquiring side. What, what are the surprises that are most likely to happen post close?
Anthony Webb (34:14):
What normally surprises people is the level of being overly optimistic mm-hmm. <Affirmative> when really thinking in, in spreadsheets you can play with, with spreadsheets and models so much to make them almost say what you want them to say. Of course. And so actually being able to execute on the ideas that are in place and putting an integration strategy and integration approach together that allows you to reach those goals. People are overly optimistic and overly simplistic about thinking about what bringing the businesses together looks like. So that’s one. Number two is just a lack of, you know, deep diligence in understanding some of the operational challenges mm-hmm. <Affirmative> and, and so understanding, hey, this, this business is in this position and maybe they didn’t pay attention to these types of things they didn’t from a tax perspective or, or from a, from a litigation risk perspective.
And so understanding the money that will need to be spent to make sure the business is, in some instance, professionalized. If you’re buying a business that’s less mature Right. Or just meets, if you’re at a public company and you’re buying a company that’s private, Amanda, it’s just different. Right? You, you know this from your days from, from, and looking at corporate transformation, I mean, businesses are just very different. And when you’re, when you’re getting a quarterly report card, you just want to make sure you’re incredibly thoughtful around bringing a business under your umbrella that it represents your business will and keeps you out of trouble. So that under, just really thinking through where some of those ahas might be in diligence is, is another area that is usually challenging. And then discounting the importance of knowledge retention and putting people in the acquired company in the best positions to win. That is a huge area that I found that’s easily glossed over. Right. But
Amanda Setili (36:09):
You, you said knowledge retention,
Anthony Webb (36:11):
Knowledge retention. So understanding the acquired employees, the depth of knowledge that some of those employees have about the systems, the processes, the technology, the culture, making sure that there is a space to really learn from those individuals and position them well and position any employees that are going to ultimately come over with the deal, positioning them well, being really thoughtful about the operating model. And this, and this takes time, and it can be a little painstaking, but really understanding what moves people and what’s going to properly motivate them to reach the combined goals of the businesses. It’s easy to discount those things. I’ve seen, you know, early in my career, I’ve seen deals where it’s just like, okay, we’re going to buy these, we’re going to buy this company and everybody’s going to fall in line. That’s not how it works. No. This is a major change in someone’s life, right? Right. Each of these individuals now has a completely new environment in which they’re working. Right. And so their, their life has changed, their professional life has changed. And so being sensitive to that and really thoughtful around what positioning them well looks like is really critical.
Amanda Setili (37:18):
I see companies that acquire maybe a startup or a technology firm that has an entrepreneurial culture and is very, been very innovative. And those are things that the bigger company was unable to, to do for a variety of reasons. Mm-Hmm. <affirmative>. And so they’re partly wanting to buy the culture <laugh>. Mm-Hmm. <affirmative>, they’re wanting to buy the innovation capability, buy the entrepreneurial zeal, the, the enthusiasm and energy, but they often don’t get it because they mess it up. They make you you know, stick to our processes. Now you have to, you know, instead of just going and do doing something, you’ve got to jump through a bunch of hoops to get a approval. Yes. What, what have you seen that enables acquiring companies to retain or even absorb the culture that they’re trying to, trying to gain more of?
Anthony Webb (38:10):
There are a couple of things I think are critical here. What I’ve learned in integration is it’s important to have a stabilization period. So post-closing, and most CFOs will probably want to ring my neck for saying something like this, because they want to drive value as soon as possible. Right? And you want to see the financials increase as soon as possible, but sometimes you have to go to go fast. And so having a stabilization period of 3, 4, 5, 6 months, we, we were just saying earlier, Amanda, you never really know the business until they’re a part of your business, right? Mm-Hmm. <affirmative>, well now you have a different level of trust and openness because you’re together, and so you have to win together, or it’s going, or the deal will fall apart from a value capture perspective. So in that first three or four or five, six months, what I found that I like to do, and what, and what I lead the integration team to do is, you know what, why don’t we just go join some of the target employees meetings?
Mm. You’re working in finance, why don’t you join a finance meeting you’re working in, you’re working in sales. Why don’t you join their sales meeting? Mm-Hmm. <affirmative>, see how they engage, see how they talk to one another, brainstorm how they set their targets, how they set their goals understand what makes them tick. You know, maybe there are certain holiday parties that they have or, or, or particular things that they do that’s important to their culture. At the very least for the first 12 to 18 months. Leave those things be Mm. Right. Leave them, leave them be and learn the reason, at least in my experience, that a, that w my company for which I’ve worked, has purchased a, a business is because they are sub, that business is superior to us Right. In some key area.
Amanda Setili (39:54):
Anthony Webb (39:55):
Right. That’s the key. But, but many companies forget to learn from that business and what has made them great in that particular area. And you never know, you might dig up some other stuff that could be great from a cultural perspective or otherwise mm-hmm. <Affirmative>. And so leaving the space to really, to really learn more about that company during that stabilization period, right. You want to make sure, hey, I want to make sure everybody’s onboarded correctly. We make the first payroll that we, that we have properly communicated with the customers, that everyone feels engaged and mm-hmm. <Affirmative> and that they have some type of connection inside of the business. All of these things take time mm-hmm. <Affirmative> to make sure people are comfortable. And then once they’re comfortable, you can say, Hey, you’re, you’re, you’re learning and you’re also sharing, Hey, here’s the way, here’s the way we do this.
Mm-Hmm. Man, it’s interesting that you guys do it this way, right? Mm-Hmm. <affirmative>, you’re not pushing things on them, but you’re starting the share, you know, historically how things are done inside of, inside of the acquirer. And that way you’re creating a space, everyone’s ideas can come to the table and you end up creating something more valuable. So when you create that stabilization period, then you move into the next level of partnership on how to execute to together. And when you allow everyone’s voice to come to the table, you end up with the, with better ideas, usually the best ideas. And, and that allows the acquirer to be more sensitive to things that are really critical to allowing that newly acquired business to continue to perform in the manner in which it’s performed and hopefully even accelerate its performance. So that’s, that’s the real space that I’ve found is valuable.
Amanda Setili (41:29):
Yeah. If you think about it, if you’re trying to acquire a company for technology, it starts depreciating the second you buy it. You know, not just on paper, but like, it’s getting, it’s becoming obsolete the second you buy it, right? And so if you don’t retain that learning culture and that innovative mindset and capability, it just disappears. <Laugh>, you know, it becomes obsolete in a year or two, and then you’re left with nothing. So I think those steps that you mentioned are very important and stabilization, kind of what I heard was observation. Just simply watch and notice and slowly blend in and make sure you don’t kill the thing that you’ve bought.
Anthony Webb (42:17):
Exactly. And the, and the people on the other side of that, they feel respected, they feel seen, they feel valued. Mm-Hmm. <affirmative>, because people are taking the time to build the relationship and the bond and to really respect and understand what’s going on inside of that business. What is the secret sauce? Many times the secret sauce is how things are done and how people have come together to solve problems. And the outcome is what is really a positive symptom many times of all of these different things that are going on in the background and, and how problems are solved and how ideas are generated. And so really getting to the next level of understanding that, appreciating it, and working together to figure out how we bring those things together. It just positions employees and, and leaders inside of that acquired businesses. Extremely
Amanda Setili (43:09):
Well, and I’m sure one of the other things you see is the internal networks in that company, the, the relationships that make it tick. The one person who knows, who knows things that nobody else knows, that goes, people go to when they need to know how to, how to do something. The one person who’s, like you mentioned, you know, the customer savant, who can mm-hmm. <Affirmative> can communicate in an, an amazing way with customers. You see those relationships and you know, oh, this is how stuff gets behind done behind the scenes. It’s not just the org chart on paper. It’s the kind of like secret network
Anthony Webb (43:46):
<Laugh>. Absolutely. You see the knowledge, you see the knowledge retainers the culture carriers, you know, the real deep, the deeply woven fabric that allows that business to tick. You also learn about the walls that are up mm-hmm. <Affirmative> the broken relationships. Yeah. The broken processes, the unfulfilled goals. Right? Right. And so you have a chance to be sensitive to that context. If a person is willing to listen and engage and really understand and do the next level of diligence, right. And really discover what’s going on inside of that business, you have a chance to start thinking about how do we mend some of these, you know, broken relationships or broken processes mm-hmm. <Affirmative>. And so there may be areas that are unidentifiable from a confirmatory diligence perspective. Right. But once you are connected inside of the business, they could unlock great value <laugh> because of something that happened five years ago and broke a relationship and it’s two or three or four critical people that need to be partnered, but, but it, but it’s broken and on their own, they’re not going to be able to resolve it. But maybe you can position people differently or just create the right type of space where you break down those barriers and walls and that that is incredibly fruitful when you’re able to find those gems.
Amanda Setili (45:06):
That’s pretty fascinating. I mean, if there was a relationship that went sour five years ago and has been contentious and filled with friction ever since, how can you fix it as a new guy coming in from the acquiring company?
Anthony Webb (45:21):
Well, some of it is just being a third party quote unquote third party. Right. We’re all in one company now, but there’s still, there’s a time where there’s still a feeling of, you know, the acquire company versus the acquirer and not versus, but you know, there’s separate, separate entities before the cultures can really come together with takes time. And so being able to see it, there are, there are a handful of things that can be done. Number one is calling a spade a spade and just saying, guys, this is not working. How can we put some training? Mm-Hmm. <affirmative>, how can we bring in a third party consultant a team building consultant that can help us work through some of these things and break down these barriers. Mm-Hmm. <affirmative>, other times you have to think about operating model levers. Sometimes it’s just like, you guys literally do not need to be working together.
<Laugh>. so Yeah. Right. You know, I could actually unleash you if I put you over here. Or maybe there’s a place further inside of our business that you could work that allows you to do something completely different and that’s been your dream. Right. Right, right. And, and you can create space that can be really healthy. And so there are all types of levers that can be pulled. It’s all about just engaging and not getting caught up in the emotion in a negative way, but understanding and respecting the emotion and trying to be creative with ways that you can resolve the issue.
Amanda Setili (46:42):
Yeah. I think when you said operating model, it really clicked for me because a lot of times when you get in there and you start asking questions, you realize that just a little tweak of something like, who has decision rights on this? Or how does this information get passed from one area to another? Or who has responsibility for this? Or what is people’s monetary incentives sometimes that’s the whole problem.
Anthony Webb (47:06):
Amanda Setili (47:07):
<Laugh>, if you change that one thing, you almost can fix the whole problem. Yes. So we’ve covered so much ground, I think we’re going to almost have to schedule another time, but I love asking two questions at the end with my guests. So these are on a different topic. What did you love doing when you were 11 years old? Anthony?
Anthony Webb (47:26):
When I, wow. When I was a young whipper snapper, I loved school
Amanda Setili (47:32):
<Laugh>. Not surprised. <Laugh>.
Anthony Webb (47:34):
I loved learning, I loved reading, I loved the partnership with teachers. You know I just loved school. I loved the, you know, little standardized te tests that you had to take in every so many grades. It just, I, I just really enjoyed using my mind and learning cuz knowledge can be power. I love basketball. And so at 11 I was starting to round into my own and starting at 12 and 13 I started playing basketball year round on the summer circuit and things of that nature and national tournaments. And so that was very important for me to get deeper into thinking about teamwork and positioning people because I was a point guard and a shooting guard. So Uhhuh just really thinking about how to help everyone win on the court so we could be at our best. And spending time with just spending time with friends and family, you know? Yeah. I’m the youngest of three. My brother is closer in age to me. And so I spent a lot of time with, with he and his friends and you know, was able to, was able to learn a lot.
Amanda Setili (48:39):
Good, good. Yeah, it’s a privilege. Being the youngest kid. I’m the youngest kid also, and it is a, you learn a lot. I was just watching what the older ones are doing. Yes, you do. So I got one last question. We have to make it pretty quick. How do you think the world your kids will work in will be different from now? And what, what do you think we need to do to prepare our kids?
Anthony Webb (48:59):
I think our kids will be working in a world where they will be so deeply integrated, working alongside artificial intelligence and machines for their everyday functionality personally and professionally, that it will be a much different world. I mean, I think that’s become very clear with generative AI and, and the machine learning and where it’s moved so quickly. And so what I think about with my own kids is less about our education system. We really need to think through, I don’t want to say whether it’s broken, but whether we need to position our young people to solve problems, both technical problems and emotional problems mm-hmm. <Affirmative> and be really thoughtful about how they engage. Because like Dr. Hess said, right, humility will be the new smart you’re working alongside machines with machines or building the machines. And what’s left is the connection as human beings and the high level strategic thinking that’s, you know, that’s critical to kind of finalize where businesses move and where we move is families.
So it’s really for our kids, it, it, I think we’ll see learning move more towards, hey here, you know, knowledge retention is not it cuz, cuz because a computer will always know more than you instantaneously our computers are learning so fast, so I can, I can Google search anything. So I, I hope that we can, you know, as a society, not focus just on how to replace humans, especially in work, but how we use that energy to think through the new wave of how people have meaningful and productive lives alongside mm-hmm. <Affirmative> this technology. So
Amanda Setili (50:45):
I think that’s so important. And I think that what you just pointed out to me is that if you can use very good EQ skills, if you’re humble, if you’re empathetic, you can figure out what the high level strategies should be, which really means just guys, what are we trying to do here? Like, what’s really the point? And if you can figure out what we’re trying to do together that everybody agrees on and everyone is psyched about, then you can make use of the technology to create you know, to make it happen, to make the execution go well. Absolutely. So. Well, Anthony, I’ve learned a lot in our discussion today and I’ve, it’s just been a fascinating conversation. We’ll have to do it again sometime. Thank you so much for being on the show.
Anthony Webb (51:31):
Thank you for the opportunity. Amanda.
Amanda Setili (51:34):
Thank you for listening to Fearless Growth. You can find out more about the show at satil.com/podcast and you can listen on Apple Podcasts and Spotify. If you like what you’ve heard, please take a moment to write a review and give us a star rating. Reviews matter so much in helping others find us. Thanks for your support.
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