The Virtualization of M&A

“One of the things that was, has been, and will continue to be challenging is some of our flagstone abilities that we highly regard in our M&A practice like our discipline for employee orientation. That’s when we bring acquired teams into Cisco and we work very hard to make them productive quickly. Of course, that normally consists of a whole bunch of in-person interactions and meetings.”

Adjust your M&A process to be virtually efficient

On this episode, Kison speaks with Kimberly Baird, Corporate Development Integration Lead at Cisco.

She’s responsible for driving the successful integration of acquired organizations into Cisco by implementing best practice methodology rooted in M&A-specific project and change management developed over 200+ acquisitions.

Today she shares tips on how to adjust your M&A practice to a virtual process.

This discussion encompasses everything from tools to utilize when going virtual, how onboarding events shift during social distancing practices, to creating adjacent value drivers.

Kimberly gives advice to those looking to virtualize their M&A process during and post COVID-19 pandemic while also giving examples of how to mitigate the risk of the classic post-integration performance dip.

Her two decades of experience at Cisco give her a plethora of knowledge when it comes to agile thinking and being receptive to growth and transformation.

“I wouldn’t say anything stopped. I think from the outside it appeared seamless, but internally we had to do a lot of thinking… How can we do this differently, quickly? Some were obvious changes and others took a bit more time to plan out.”

Text version of interview

Maybe we could start off with a brief explanation of your role at Cisco.

I am an integration lead in our corporate development function, which reports up to the CFO of Cisco. I lead acquisition integration and divestiture programs across all of Cisco, and how I do that is partnering with business leadership to define the strategic desired outcomes for our investments. Together with my colleagues, I lead cross-functional M&A teams to plan and deliver on the business outcomes that we agree upon across the executive team. 

How have you personally seen today’s environments with the downturn COVID-19 transform the industry? 

We have a mandated work from home policy that was implemented in March, and we saw out in-flight M&A deals impacted immediately. We had deals at the announced stage, deals in the process of due diligence, integration planning, we had delays on divestiture TSA exits, all of which were impacted by COVID-19. In-person meetings and travel plans were canceled, so we had to quickly pick up a virtual approach, refocusing on the Cisco Webex collaboration platform, which allowed us to adjust really quickly.

I’d love to get into some of the techniques you’ve adopted to drive change and virtualize your M&A process.

Cisco Webex is the standard we use, so we immediately turned to that. What is challenging is some of the flagstone capabilities that we highly regard in our M&A practice like our discipline for employee orientation. That is when we bring acquired teams into Cisco and we work very hard to make them productive very quickly. Of course, that normally consists of a whole bunch of in-person interactions and meetings. That’s the area we are continuing to improve on. 

Sounds like a lot of your processes got pivoted into finding a digital way of doing what needs to be done, where a few things moved on and progressed. Was there anything that didn’t progress?

One thing that happened is that we had some TSA exits as a result of the divestiture, where we were moving some labs and those got stoped, halted, and delayed where it wasn’t safe for people to work together in that close proximity to move the equipment. That was one reason, and the second was the regulatory situation in India and the U.K.

What was it like adopting new technologies during this time?

I found that we are actually using our digital collaboration tools to their fullest extent, so we have been adapting deeper capabilities we didn’t use before and discovering new things even on our own product. However, we have yet to derive how that may have impacted the processes that we usually implement.

Any positives that come out of this, like newfound ways of doing things better?

I have noticed some unexpected benefits regarding the legal diligence process. We looked to use and augment our meetings with collaboration and tracking tools and we ended up better documenting the conversations. You always want to have assets and data that you can share downstream with teams, such as integration planning teams, so we took more time to structure and document the sessions in order to cover everything. 

Can you tell me a little bit more about how have the onboarding events changed since the pandemic?

When employees are brought into Cisco, we have a whole slew of things that we do to make them feel more welcome, get them up, and productive very quickly. We have been forced to completely virtualize that experience and we are still experimenting with ways to make that engagement more personalized because some of that in-person connection is lost. It’s more difficult to get a dialogue going, but fortunately many acquisitions that we do are pretty savvy in terms of using collaboration tools.

Have you noticed a lack of enthusiasm because of a lack of in-person experience?

I think it’s too soon to tell. We are trying to do a little bit more hands-on follow-up so that we really get a better pulse on what’s going on with the folks, but we are definitely going to keep an eye on the effects of virtual experience.

How has the importance of follow-ups changed since virtualizing the process?

I think we have just taken a more active role and we need to take a more proactive stance on personally following up with people. It takes a lot more time, resources, and money to execute everything in a really effective way because there is planning involved. For example, we have some planning for employee orientation coming up, and this means making small groups, leading the employees through the steps, where we’d normally gather them all in one room and give them steps to follow. 

What is your advice for those looking to virtualize their M&A process? 

I would definitely recommend using the collaboration tools at your disposal and use all those capabilities to the limit and practice working with them. 

Are you using chat or any other tools in conjunction with task tracking tools?

I think it’s awesome to have a chat environment with your team during things like diligence sessions, and similar, so there is always this ongoing dialogue that you don’t have to expose to the target. This is especially important in M&A where you need to keep information safe and highly confidential, especially when you are recording.

How do you get the mindset that is pro-change orientated, agile, and adaptive? 

I love driving change and I think the way you do that, especially in this environment, is to work to understand what it’s like to walk in someone else’s shoes. This helps you understand people’s motivations and fears. I am a believer that a business is run by people and I have an optimistic point of view where I feel like people in our company come to work wanting to do a good job and make a difference.

I think it’s the same with any small company we are looking to buy - they have been a part of something, they’ve grown something to this point and they have been an important part of it. They want to make sure they continue to be valuable. That’s how I’ve driven change in my past and currently. 

Can you give me some examples of what goes wrong when you don’t have people focused on integration?

If people that are coming in are not properly handled, helped, and provided the right environment, they are not going to be productive and they will struggle, especially in a big company. They won’t feel as if their contributions matter.

Coming to a large and complex company like Cisco, there is a whole set of acronyms that people use that are different than anywhere else in the industry, so if not engaged you will loose highly skilled individuals. In this sense, from an integration standpoint as a buyer, you take on all the complexity of the acquired operations without the benefit of the value delivery, which is inherently delivered by people. 

So there is a big value and focus around keeping everybody engaged. What is the trick to doing that?

The trick, beyond what I’ve said already, I think is setting up a process that keeps very consistent touchpoints along the way. We have the introductory sessions, where people learn how to use our tools and processes so that they can be productive inside of Cisco, and then just keeping a pulse on the team. We do that with reviews with the executives, we do that by keeping in touch with the employee population that’s coming in. We track acquisitions and the value that we are driving with the people and talent for three years, keeping tabs on who’s left and the desired metrics we had set in the beginning. 

You have been at Cisco for about twenty years now. Can you share what you’ve seen in terms of how has the integration process evolved over those years?

In the first ten years, we were fully integration focused. We buy the company, we bring it in and it becomes a part of Cisco completely. Over time we realized that we could take a more of a hybrid approach or even more of a federated approach. Over time we have adjusted our practice to really focus on the delivery of value and what outcomes we are looking to achieve, based on our business and financial models that we produce and validate during due diligence. I think our practices changed tremendously in the last five years to really embrace the diversity that new companies bring in and make sure that we use the scale and size of cisco to their benefit. 

How does that change things regarding your actual execution approach of integration?

In recent history, we have really been changing the way we operate to try to map more obviously to the business that’s coming in, focusing on the things that matter and trying to identify that secret ‘sauce’ of that team and making sure that’s protected.

Have you gone through an integration where you went through the process and you started discovering some new opportunities to extract value?

Yes, definitely. One of the deals that was a breaking point in terms of how we architect our salesforce environment, where we used some of the practices that they had in their environment to really help drive recommendations for ubiquitous salesforce environment for us at Cisco. Anyone that has been a serial acquirer knows that the operational elements build up.

So, one of our acquisitions really helped us break that model and figure out how to scale it in a more operationally streamlined way. Thanks to that we can apply some of the new thinking from acquisitions into our broader IT architecture and environment. 

So instead of putting the acquired company on a rigid integration plan, you find the opportunity to learn the best practice from them. How do you get to the point where you are thinking that way?

We have been very focused on trying to change our mindset and we try not to impose our own values. We try to figure out ways how things can work both for them and for us. I don’t think there is a prescriptive way to do that because it is a real culture change and a change in management tact which happens over time. 

Is that a leadership thing and if so, who are the key leaders that would drive that mindset?

All levels of leadership have a part to play, and some do it better than others. As an integration lead, I think it is my responsibility to drive that kind of change by pushing people and setting them up for success when they make a change. I think elevating those people and giving them kudos when they are really putting themselves out there matters a lot. I had people challenge me, telling me we need to be focused on this or that, showing me what they believe we need to pay attention to. I always try to hear them and if it makes sense I will change my direction and I think people respect that. 

What’s the advice you would give around avoiding the whole performance dip post-integration since that tends to be a very common thing?

It can’t be avoided, it just needs to be mitigated like you would with any risk. You want to try and shorten the time and duration of that dip. We plan carefully, we have very consistent touchpoints with the acquired team through the anticipated dip. You have to pay attention because sometimes organizational changes might make it worse or better. There are things that happen outside of the control of even the management team that brings in the acquired company, so you need to keep an eye on how broader organizational changes might impact them directly. 

What are the key things that really cause that performance dip?

Oftentimes with technology investments, we bring in a core group of talent, and more often than not we need to make changes on their product and integrate it into a platform that exists at Cisco, so there are operational things that take time and engineering effort.

I think the key is to work with technology executives, the folks in the business that is responsible for the success of the people, the technology, and the product roadmap coming in to inspire the incoming team members. This essentially creates space to help them realize even more value, scale the product globally, and scale the product to major global customers. This is what makes the difference. 

I am curious to know, how do you look at the speed of integration? What is the balancing act between getting the value out of integration, but still not tempering with performance hampering that could potentially happen if things get rushed?

We have staggered, especially operational integration, for certain teams depending on the business case. If there are significant operational capabilities that need to be stood up for, then we would just phase it out to make sure that we integrate at the right time. Yes, you do want to integrate quickly, but that is all about making the employees productive. 

Kimberly, what’s the craziest thing you have seen in M&A?

One time, we got a call from the EPA about some of our own devices in pieces in a field. Some former employees had taken the printer out to the field and had their way with it. This wasn’t an integration, but a divestiture, by the way. 

Ending credits

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