Ep. 161: Omar Choucair - M&A Operations

Contact Omar Choucair: https://www.linkedin.com/in/omar-choucair-cpa-80264815/

FULL EPISODE TRANSCRIPT
Mitch: (00:05)
Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. This is your host Mitch Roshong, and I'm pleased to introduce you to Omar Choucair. Omar is the CFO at Tritech a world class financial operations and insights company committed to transforming financial processes to best in class levels of efficiency and effectiveness. Omar is a senior level financial executive with broad experience in corporate finance, accounting, corporate governance, and FP&A management skills. Here, in episode 161 of our series, he talks about why and how corporate M&A operations are falling short and where he sees the trends going in the future. Keep listening as we head over to the conversation now.

Adam: (00:57)
Omar, thanks so much for joining us today, and we're gonna jump right into things in Bain's global M&A 2021 report, they state that M&A is expected to spur 45% of revenue growth over the next three years. Up from 30% over the last three years, one of the first lines of the report says as the world locked down and masked up M&A endured, do you agree with their sentiment?

Omar: (01:23)
Yes. Wholeheartedly. And, thanks for taking the time it's, you know, the last 18 months have been quite overwhelming in terms of, the things that have happened to, you know, public companies and private companies. And, you know, to the extent that, somebody would said back in, the February, March timeframe of 2020, what was about to happen? I think a lot of people wouldn't have believed it, but yes, it's, it's been astounding.

Adam: (01:50)
Definitely. I think everybody's just their minds have blown what's happening. but what's great is that business seems to be booming or not really booming, but increasing, which I think is one of the things that with everything locking down, we're still moving forward, which is great.

Omar: (02:07)
Yeah. It's if you go back and think about just how many companies have grappled with, employees working remotely and the technology and the processes and the procedures that all these companies had to deal with early on in the pandemic. And to think that whether it was, you know, strategics, large strategic public companies, private equity, venture capital that this M&A engine continued, and not only continued, but accelerated all the way through the end of 20. And then, continuing through the first, you know, 10 months of 2021 is absolutely stunning.

Adam: (02:48)
So even with this positive outlook that we've been talking about, many corporate M&A operations seem to be falling short still, can we focus a little bit on why and how this continues to occur?

Omar: (03:01)
Sure. I would say a couple of things. So first of all the large strategics, you know, they had the capital. So I don't think there was an issue with respect to capital. I think they had cash on the balance sheet. They had plentiful access to, you know, to public debt, private debt, et cetera. I think what could have happened was that these large strategics had a process and a control procedure about how to do M&A, it was like very programmatic. And I think what could have happened was when everybody went and started working from home and the remote side, that a lot of that programmatic process, it wasn't hardened for people working from home. And that's my personal belief. And I think additionally, to the extent that those companies, those large strategics had, built in technology, whether it was on the FP&A side on the financial close side, just in terms of, you know, R&D, those companies that were really hardened and connected on the IT side, I think they did extremely well versus their counterparts that maybe had not invested in technology. And they saw this like, gap between what they thought they could do and what they actually could do. And just the, the astounding pace at what's, the M&A, you know, market continued. It really, it probably put a lot of pressure and squeeze on some of those companies.

Adam: (04:28)
Do you think that there was a bit of a change management gap as well for those companies that were not kind of up to par?

Omar: (04:36)
I think the, the change management is always difficult. And if you kind of, you know, zoom out a little bit in terms of change management and just the integration, I know the first hundred days are just, it's almost like it's the, it's all the due diligence, you know, up until the time that there's an M&A deal that gets signed. And there's a whole process around that. And I think we can talk about that in a little bit, but in terms of the first hundred days after, those first hundred days after are critical in terms of culture, in terms of what did companies buy, did they buy technology? Did they buy, did they make customer list? Like, what is it, what was the strategic asset that they bought? And I think that's really important.

Adam: (05:16)
Do you think that first hundred days is even harder when you have a remote workforce?

Omar: (05:21)
I think the first hundred days are significantly harder when you have a remote workforce. And the reason is because there's two cultures that have to get fused. It's the it's, you have to prep the buyer's culture, right. In terms of now we have this additional responsibility. And a lot of times, you know, the C level and the board, they're all super excited about, you know, doing the M&A, but then it's the mid-level management. Everybody else go, wait a minute, I've got all this additional work I have to do. Right. So, sometimes there's a gap between the board and senior management and what, you know, the people that actually are doing some of the work. So I think there's that. And then I think also to the extent that, you know, the systems and the process and technology are not really running at optimum level, when you bring on an additional, you know, set of revenue streams, and HR and people and technology, it can be a very stressful period. And then if all those people are working at home and they don't have that culture. Yeah. It's a lot of work. And I think, you know, for the CEO, CFO, et cetera, there's a lot of gut checks that have to be made all along, all along the way.

Adam: (06:36)
All right. So we've been talking a little bit about the, how and the why and how it affects the people, but can we focus now just what's some steps that we can take to overcome these challenges and the things we've been discussing.

Omar: (06:49)
Right. I would say it's really in two pieces. So the large public companies, you know, they have obviously the large public companies versus, you know, private, you know, PE-backed companies, if you will, it's a different ballgame, right? So those public companies, they have, you know, legal obligations to have programmatic controls and processes, et cetera in place. So, so any company that's a public company. And then we can talk about the SPAC and little bit, they they've had to jump into that public company real quickly, but to the extent that they have controls and procedures, it's a little bit easier for them to solve the gaps because they have a roadmap and they have certain monthly and quarterly controls that have to get done. And they're very well documented. They're very well tested. They have third parties that are testing them all the time. So the gap is a little bit easier for public companies because I think they know what to do. I think the real question then is for the management is how do they get folks th...