Steve Sapletal is a Merger Integration Leader with over 22 years of experience. He is currently a partner at KPMG where he overseas M&A integration strategy, planning, and execution. In this episode, he discusses with Todd some of the key factors on why a company should bring in an integration team, as well as some of the key mistakes companies make after an acquisition. Transitions are a stressful time for everyone, especially the employees, which is why companies tend to see a drop in productivity when a M&A transaction has been announced. Find out more on how you can ease the transition for everyone on this edition of the podcast.
Key Takeaways:
[1:00] Who is Steve Sapletal?
[3:25] If you're looking for help after you've signed the letter of intent (LOI) it's too late!
[7:25] If you're buying this company, what are you really buying it for? You want to define what the deal drivers are early on.
[10:00] Employees want to know what's going on. It's better to be honest with them than to hide it.
[10:35] Once the announcement has been made, expect productivity to go down by 20-30%.
[11:35] How many people should be in charge of the communication strategy?
[13:50] You want to have a 30-day detailed plan, but be prepared that things will change.
[16:05] After a deal has been closed, Steve and his team do twice a day check-ins for the first 7 days.
[16:50] You want to course-correct as quickly as possible.
[17:45] What is the average amount of time it takes for a company to fully integrate?
[20:35] Steve talks about the different types of integration companies and what they offer.
[25:05] What should a business owner look for in an integration company?
[27:45] Steve talks about some of the common mistakes that can happen.
[32:50] So many people forget about company culture. It's usually grouped under HR, but Steve thinks this is a mistake.
[37:15] A lot of companies will take the wrong people and give them integration responsibilities. If you don't have the right person, you need to hire them.
Mentioned in This Episode:
Jeff Hawkes is the manager of corporate development at Ecolab. He and his team evaluate, analyze, and perform due-diligence as well as offer post-merger integration planning for global M&A transactions. Jeff discusses in this episode his investment methodology, due-diligence procedures, and other key factors towards purchasing a business. Get a behind-the-scenes look on what an M&A manager looks for in a business and how you can set your business up for success.
Key Takeaways:
[1:35] What's the difference between a strategic buyers and a financial buyer?
[6:50] What is EBITDA?
[7:40] How much of an impact does the economy have on the decision-making process?
[9:45] The market is quite hot right now. Jeff believes one of the factors to this are the private equity firms raising capital.
[10:25] What's Jeff's investment/buying methodology?
[15:35] How does Jeff and his team perform proper due diligence on a company?
[16:50] How do you go about measuring company culture?
[19:20] So what drives a purchase price? Jeff lists 3 factors you have to consider.
[22:00] What are some of the things Jeff looks for?
[25:20] How does Jeff react when business owners begin to hold off on key purchases for their company when they're getting ready to sell?
[30:20] Jeff does about 6 weeks' worth of due diligence on a company.
[35:30] What kind of things should a business owner be doing to increase the value of the sale?
[40:10] Don't try to hide or shave the numbers down. Be upfront about it.
[43:55] Why do acquisitions fail?
Mentioned in This Episode:
Eric Nicholson has been in the mergers & acquisitions career field for over 20 years. He has primarily worked one-on-one with business owners looking to sell their businesses and is currently the Managing Director for Green Holcomb Fisher, now owned by BMO Capital Markets. Eric shares a bit of his expertise on how to hire the right investment banker and how to properly come up with an exit strategy long before you retire. Tune in for more great insights from Eric.
Key Takeaways:
[1:20] Who is Eric Nicholson?
[2:05] What is an investment banker and how is that different compared to a business banker?
[3:55] What's the difference between an investment banker and a business broker?
[6:50] How do you pick an investment banker that's right for you?
[10:45] Remember, you can always ask for references!
[11:05] What are some of the biggest mistakes Eric sees in the business? When clients go with an investment banker who says he can get his client the best and highest price.
[11:45] Ask different investment bankers for an evaluation on your business.
[13:05] How do you know when it's the right time to sell?
[14:05] Don't wait too long to sell your business.
[15:05] Selling your business when you're ready to retire is often not the best strategy.
[16:50] You want to start on doing the necessary due diligence and documentation at least a year before you plan to sell your business.
[18:10] Where do you draw the line in putting money into the business versus. not?
[18:50] How is you cutting costs going to play out with potential buyers for the business?
[21:15] What is your business really worth?
[23:35] Anything 15% or greater in EBITDA margins is considered great.
[24:50] What's a good EBITDA pay range?
[29:50] The biggest factor in businesses that did not perform well was when a major customer changed their mind.
[30:20] What are some of the common mistakes business owners make when trying to sell their businesses?
[34:50] What should business owners concentrate on when they're preparing to sell their businesses?
[37:30] Final piece of advice? The sale process can be a lot of fun.
Mentioned in This Episode:
Call Eric: (621) 904-5700