Kaija Katariina Erkkilä, Midaxo: We were maybe one tenth the size of Nokia, but we had similarities in our business culture, quick international growth and so on.
We had a healthy amount of pride in it.
Acquisition and especially integration, are managing change.
And some say that change management is when you have to repeat yourself 7 times or perhaps even 12 times.
The management of the company would traditionally, and sadly still, show a set of slides to explain the reason for the acquisition
and expect their staff to accept that. But the employees won't commit to that.
So when we three new owners were there, especially Becton Dickson who was supposed to get all the supplies
And the rest of us were supposed to get the ventilators and anesthesia business and gas for Baxter.
We had to divide these units and staff resources before signing the acquisition agreement.
Sami Miettinen: Welcome to the #Negotiator YouTube channel. My guest today is a Master of Economics, Kaija Katariina Erkkilä
A founder of the great SaaS company called Midaxo, and also the company's biggest individual owner. Welcome!
Kaija: Thank you! It is a joy to be part of this.
Sami: Yeah, and we met ages ago, back in the dark nineties, when there was a listed company called Instrumentarium.
It was actually called Datex-Ohmeda but for some reason the name Instrumentarium got more attention that it should have done
But what many people don't know is that there was a Nokia styled global success story behind it.
Were you proud when you were in Datex, that later on became Datex-Ekström and then Datex-Ohmeda?
Kaija: Yes, it was very clear. We were maybe a tenth the size of Nokia, but we had similarities in our business culture, quick international growth and so on.
We had a healthy amount of pride in it.
Sami: Yes and I was young then, quite an annoying young man frankly, that had just got into Credit Suisse
There I was given a task of Project Autumn. I had the whole board of Instrumentarium there with me
And the amazingly talented, French gentleman Francois Maisonrouge and we took care of the Ohmeda transaction. Here's a chart of it.
It was a million dollar deal that was divided into three. Datex bought off the anesthesia machinery related units.
Baxter got the gas business that was related to these anesthesia machinery.
Kaija: Yeah, Becton Dickson bought the supplies. It was roughly about the same size as Datex's share at this point.
Sami: Yeah. This was an unbelievably complex deal at the time. Probably still would be.
What you have to remember that at that time, the main source of communication between me and Francois was voice messages.
I listened to the voice messages every morning, terrified to find out what needed to be done. We flew a lot between New York, Helsinki and London.
We succeed in completing the deal, after all. I'll come back to this slide still, we were in a bidding competition with Thermo Electron.
They could have bought the whole company, they were a very aggressive bidder at the time. They had the billion dollars it would have required.
And they almost bought the company then. I recently spoke with Sami Erviö and he refreshed my memory about Clateo Castellini, who was the CEO in our holding company.
He wanted to cancel the deal, and we even walked out of the meeting then. However Olli Riikkala, our CEO, wanted to return there, just to be polite.
Back in the meeting room, all of a sudden the people from BOC said to us that we had won the deal. It was quite a negotiation.
But in the meantime, while things were still ongoing, you Kaija, and your team were working on the post integration plans in the background.
Please tell us a little bit about that side, I didn't really know anything about that.
Kaija: Actually even before the integration plan. Ohmeda had grown its business over the years and they had done many organisation changes.
The last change they did, just before selling the business, they had combined all these different departments under one company.
This monster of a company had everything in it and it didn't work anymore like that.
So when we three new owners were there, especially Becton Dickson who was supposed to get all the supplies
And the rest of us were supposed to get the ventilators and anesthesia business and gas for Baxter.
We had to divide these units and staff resources before signing the acquisition contract.
That was a lot of work. We had to decide which employees and managers would go to Dickson, and who would come to us.
Baxter was quite easy, they had clear production, but for rest of us it required more work. It all had to be done before signing the deal.
Sami: Yeah and for me it turned into a humongous excel where the costs were split. The seller's adviser tried their best
But of course the splits changed when we had to estimate the best way to divide them. We made all kinds of proforms. It was challenging.
I have to say for myself, I have had over a hundred interims over my investment banking career and about this case I would like to tell a story
I liked to drink cappucino in the evenings. I ordered a cappucino after a fancy dinner with the CEOs in New York, and Francois told me off in front of everybody.
Instead of a milky coffee he insisted that the waiter bring me a proper drink. So this is why I like to drink cappucinos in the evenings.
Kaija: Well, there you go. These days it is ok to drink whatever you fancy, whenever you fancy. Whatever works for you.
Sami: Yeah that is true. It was a different time then. Coming back to you, it is fair to say that it was complicated but that you clearly had a strategy?
You had organic growth. Datex was already a good product in itself. I presume both Ekström's and Datex's supplies were good.
Kaija: Well, Ekström's supplies needed to be replaced. But interestingly enough, the share we got of Ohmeda, was twice as big as Datex's turnover at the time.
If there were 1200 of us before this deal, after the merge there was 3700 of us. 200 were let go, so in the end we had 3500 employees.
It was quite a challenge, and when we think about the integration, we had to divide these employees first, then different countries had their own units.
So in the integration we first had to combine all these units together. There were many countries, and we had to create some daughter companies.
It was a big challenge. For example, Olli Riikkala gave me one challenge related to human resources. We had two people in charge of human resources.
One that was in charge of hiring people for the production, and one that was in charge of contracts and other issues related to the rest of the company.
But we didn't really have a proper human resources department. For example, Ohmeda had 4 HR departments in America, each of them had 10 employees
They had had several factory units that had been shut down, combined or changed. In France, their HR manager was also their vice CEO.
There were a lot of these kinds of units and we had to determine what the purpose of them was.
Sami: I have to mention, Eero Hautaniemi was also there at the time counting these figures, and Karita Lassila was in charge of creating the contracts
There was Space Labs from Grunge City
My understanding was that besides the anesthesia machinery, they also purchased neo natal incubators.
This was a bit like Poison Pill for General Electric which was one of the biggest companies at the time.
There was a monster strategy there that General Electric would purchase us unless we grew so big that they couldn't afford to.
Kaija: I was not actively part of it anymore at that stage.
Sami: Well, in the end General Electric purchased us anyway when the exchange rate of the dollar was strong. There was a short, weaker stage in determing the value of the company
They came and set a premium on us and bought us off. Credit Suisse got good fees from that deal, I hear.
Kaija: Yeah. At the time they were already looking at it from afar, but in a way it was a big shame then.
Datex, being part of Instrumentarium, had been built into a big global company, and combining Ohmeda took a couple of years.
There were plenty of challenges. Still, our position in the market was strong, we had great product development and production in Finland.
Just yesterday we had a get together for old Datex staff. We went to have a drink and reminisced about the old times.
The knowhow and innovative culture that Datex had, even though we were only a third of the new Datex-Ohmeda company, that culture slowly seeped into Ohmeda as well.
Of course it was different, they had the ventilators that keep people alive during anesthesia. We had monitoring devices. The risks are different.
During the integration, this innovative spirit also moved to Ohmeda.
Sami: A quick medical check up. During general anesthesia a person is knocked out so deeply that the machine is needed to keep your breathing going
And then you can be surgically operated quite deeply. Then there are lighter anesthesias where you breathe by yourself.
Kaija: Yes and these days a lot of operations are done without the need for machinery.
But the anesthesia means the person's muscles are hamstringed, and the lungs are also a muscle. So that is why breathing needs to be maintained artificially.
This is why this kind of machine is important. The monitoring machinery oversees the vital organs during the anesthesia.
Sami: Yeah. So you mentioned HR. It sounds quite rough, if just two people have been in charge of running a big company's HR by yourselves.
What I understood from that is that that was the time when you started to develop practises on how to keep track of staff and synergies and so on.
Kaija: Actually, I did not have a HR background myself like these two HR employees, but we took on 4-5 HR employees more from Ohmeda, from America, Australia, Japan and Europe.
Then we began to plan what kind of organisation we would need for this globally successful company.
As we did not know how to do this at that stage, we had to start from the beginning and see how HR had developed from payroll and party organising
And learn how strategically HR is located in other companies. It was quite the learning curve.
This HR organisation was built in a year, and Datex-Ohmeda hired an HR manager to Helsinki as well.
Sami: Right. And at the same time when you were working on these post integration matters, you noticed that some practises could be repeated, like in basic project management
Let's check out another slide. Ten years after the previous slide and I was helping StoraEnso's Papyrus division.
This was a quite clear distripution business. They bought paper and cardboard either to their own storage or sold it forward. There were some scaling benefits.
During this business deal, I got very close to Mats Norlander and Stig Johansson to create this business deal strategy and bring it to life.
There were three business acquisitions. It was a classic business acquisition funnel where you have many options and you choose the most suitable ones.
There was one business acquisition from France, one from Holland, one from Germany and the UK's unit was divested.
All these acquisitions were under the one big strategy. You probably recognised some features from that sales funnel, but let's see the next slide.
This is a similar slide of the acquisition strategy that was done for Midaxo. You probably also noticed how silly it is to use PowerPoint for these strategies.
Kaija: Yeah, I had already been part of couple of business acquisitions with Datex, in Germany, France and the USA, so I had already seen these practises.
When I left Datex-Ohmeda, I started my own consulting company where I mainly consulted business integrations, and sometimes I was part of the beginning of the purchase.
I began to think how I wasn't able to share the information when I was part of the integration of a company that I had already helped a few years earlier.
And I knew all the things behind the company, but the information was hidden on private people's PCs and excels. It was not accessible. People had changed positions.
When the new integration happened, everybody turned inwards when they should have had the time to manage, and focus on the people, culture and communication.
We had to build processes again. After the Datex-Ohmeda and consulting experiences, I had already written a couple of books on business acquisitions.
Sami: Yeah, here's a couple of pictures. So you wrote down on a piece of paper, checklists, advice, etc.
Kaija: Yes, for the first book I interviewed a couple of Finnish businesses and then wrote about business integration, takeovers and cases like these, and what models to take in consideration then
That book was mostly because of Datex-Ohmeda. Then I met Anneli Valpola when I was a consultant and we joined forces and created a check list book for the technology industry
Then after that we wrote the M&A Coach book, which discusses what integration could be about. It is based on creating value, and talks about integration being a change process , 0:17:17.000,0:17:22.000 Business acquisition is always management of change, afterall, and communication, management of cultures.
Somebody once said to me that the book is almost like a university course of business acquisition and integration.
From all of that, we have to remember that people do not read from paper. There's always so tight schedules in acquisitions, and no time to share the information.
We may be on the other sides of the world at times and it takes time until we are back together in person. How could we get a platform where all this information
would be in real time, and becomes updated as the process goes along, despite the location or the time zone.
You could be completely updated on the latest changes, and you could update the information yourself and share with others.
I ran into a person called Kalle Kilpi of the Aspida company, where I was as an investor and member of the board. They had similar thoughts as well.
So we started to think about creating something new about these issues.
Sami: Yeah. You had a typical learning curve for SaaS, where you pivoted the business model directly to companies if they were interested in buying it
But then you found a good working SaaS model, where people just purchase the software without any trial periods.
Kaija: Yes, and if you have to do it individually to each company, all the installation and technology is very expensive and maintaining it is complicated.
We were looking for an easier global model. Kalle looked into the options and he came across a cloud based service.
For 3-4 years everybody kept telling us that no one will buy a cloud based service. The information is too delicate in acquisitions, it can't be stored in a cloud.
But it has been the right kind of model all in all.
Sami: Oh yeah, I have had to go through piles of papers during my career. Nothing sillier than making a young guy read a piece of paper and try to glean some
information out of it. And you weren't allowed to copy it so you had to type it up again. It was horrible. Never again!
But public cloud services have to be secure and the data can't leak anywhere. But these dedicated data centres are long gone these days.
Kaija: What happened to us is that when we first started, we put everything on the internet, just to see if the statistics were true that half of the acquisitions
were in the USA, and to see how this technology would be received. In Europe it was much slower. It was better received in the USA.
But then the companies that reached out to us started to be companies that made multiple acquisitions, and they were big companies with particular processes
At the best of times, our technology manager used to send us 40 page questionnaires with requests and requirements from these companies, and it happened multiple times.
That's when we realised that we needed something that would make this repetition look safe and secure, and that we have facts for it
Then we took on this project that was a big challenge for a small team like us, and a big investment, but we created a standard processes.
And what I have heard is that there has already been three rounds of auditions of these processes, they get audited regularly.
That is enough for our clients, as we are speaking the same language.
Sami: Now we could show the sales funnel again, in electronic form. Can you walk us through a company acquisition process, from the beginning till the integration?
What are the typical steps in between?
Kaija: This kind of tool, like we have the Platform, the user or the buyer in this case can model the process themselves.
They can make a few clicks and type up which processes they are going to use. Some write it up, some use codes or terms for them, but it's still their process.
Typically there are the the beginnnings of the process, first meetings, negotiations, different stages in different parts of the processes.
That way, we can see how each of these cases inside these boxes, developes from one stage to another.
In the latest versions of the program, we have got an automatic link in each case's box, that already produces the basic business details that can be added on.
We can attach files to it, add meeting details, slides related to this case, and so on.
And the contact details and other important matters are in the same place.
Sami: Yes and at this point we could look at another slide that has all the same projects but it works as a gunt chart, a critical timeline for the project
where you can allocate different tasks to people.
Kaija: Yes, on the left hand side you can see different tasks listed. There can be different stages of due diligence in detail, different stages of integration
There we can provide timelines, how the stages will go, which stages are linked together, who is responsible for these projects, what data is linked to these stages.
This is where we get the whole picture of the project. As this is a SaaS service, all the data is there in real time and can be accessed by everybody involved.
And one important feature is permissions, where we can determine who can see what information.
Sami: Yeah, you can't show this kind of information to just anyone. By the way, I am a big fan of naming projects, I have my own logic how I name the projects I manage
I curse everybody behind project Alpha or Project Blue. Actually, during the Ohmeda times I found Project Autumn quite a boring name.
Kaija: Yeah, well it was autumn when we were working on it so in that sense it was an accurate name!
Sami: What I use a lot is the Canadian Firmex or The American DataSite. They are virtual data rooms, but they don't really have many features for project management
I guess we can say that your system is more developed than theirs?
Kaija: Well our system is very different. These virtual data rooms or CRM sites, have different starting points. VDR is a tool for due diligence, first of all.
With CRM services, for example SalesForce, the focus is more on the people that are part of the project. For us, these are just one feature of our latest versions.
Besides this one feature, there's the rest of the project, all the tasks involved, timelines for the project and how the case developes.
When it comes to VDR, this can be utilised for the buyer as well these days. Usually they are used by the seller in the acquisitions.
They can also be used in these particular acquisitions, so that the buyer will take the VDR and the seller will input all the necessary information there and add attachments
If for some reason the deal doesn't go through, the seller gets the information back but in other cases all the relevant information about the negotiation goes to the integration team
From our customer Hewlett Packard Enterprises, one of our first big clients, their due diligence process has improved by 50%. They've been our client since 2015.
For integration, I can mention Phillips. They have used us for years and their integration processes have improved by 40%
It means that they have learnt from repetition, and the organisation needs to be taught as well through management of change.
The tool is not enough on its own, but it gives you the chance to improve your processes.
Sami: Yeah, it is quite silly to do the acquisition and due diligence with a different team than the integration. A bit like what happened in the Ohmeda case with us.
Kaija: But that happens a lot still, sadly. And there is one particular matter that is a big challenge.
People that are so called M&A managers. There can be 1-2 people in each company and they are responsible for making the deal happen.
But in most cases they are not responsible for the integration. Thankfully this has started to change now.
These days companies have begun the process by thinking of the target value they want to achieve with the acquisition, what would the integration include and then due diligance.
They don't just stare at the information available. AI can do that already now. But what AI can't determine is what kind of management processes they have
What kind of cultures they have, what kind of communication, what is the actual value of the net income that they are trying to achieve.
And this is when thinking about this whole process, building the value from the beginning till the integration is crucial
That is a great benefit you gain from these platforms, like what we have at Midaxo, that you can manage the whole process.
Sami: Right. When I was working on the StoraEnso deal, the people there were so great, and they had me do the commercial contract negotiations for them as well.
That was so cool. I believe it was the standard that I didn't just have to take care of the acquisition negotiations or share contracts, or handle the modelling and due diligance
I also got to do delivery contracts, negotiate the discounts on the volumes, transition contracts as well. That was very interesting.
Then I joined SEB, and I don't want to speak ill of them, but my tasks were completely different there, half of my the previous responsibilities disappeared.
Even though in most cases advisers focus on the exterior issues, sometimes they get linked into the internal matters and it may work just fine.
Kaija: Yes that is true. However, consultants are used a lot in integrations but there is a reason why they are different.
This is one of my favourite thoughts: acquisition is a comprehensive project. It starts from the thought - what kind of value we are trying to achieve?
How do we model the value of the options we have? However, it won't become a reality until we have reached our target, or at least some of it.
Some information won't become available until the ownership has been handed over, and we have gained the trust of the company that has been purchased.
I once worked as a consultant and I heard this story in a seminar, about how a company had been purchased two years ago
The new owner had asked for information about how some things have been dealt with in the past, and they were surprised by the answer. They asked why they hadn't been informed earlier
The employees had simply answered that they hadn't been asked about it before.
But if you have a genuine shared goal about what needs to be achieved, you don't need to ask, because people will actively tell you things that effect achieving this goal.
I have got another favourite matter that I always try to push, or I used to when I worked more as a consultant
In the previous negotiation you had, you had something called Must Win Battle in your strategy.
As I am an IMD alumni, I know that the book is from there originally and I fell for it. I figured out that this concept could easily be used in business acquisitions
My thought was that when the ownership had been handed over there's always such a rush at that point to get things done and finalised.
Why wouldn't we use a Must Win Battle concept? Go somewhere for a couple of days, the key people from the buyer's side and seller's side
and think about it from this concept and go through the key figures and information about the past of this company and what kind of decision processes they have used
What has been the buyer's target, the reason this acquisition has gone through? Try and work out if they have been on the right track all along.
Then try and create a shared model, before starting on the integration. Many times people just begin the integration without finding out if they have a shared model.
If they first wrote it all down and then got given the project tool, then the members of the board would give a similar message, dispite their location.
I would like to argue that bringing your models together and using these project tools, could create a lot of extra value.
Sami: Yeah it's funny, the episode you were referring to with Mika Sutinen and Antti Haapakorva, Mika is very successful chair person of a board and CEO of Musti and Mirri
He claimed that strategical acquisitions can't be sensibly justified, or something like that.
Sometimes these business acquisitions fail to bring extra value and it may well be that if you fail to plan, you plan to fail.
It must be. You mentioned Must Win Battles. I interviewed Henri Sora, the CEO of Labrox and one of the owners of Ambienta
He wrote a book called Objectives and Key Results, and I am a big fan of his OKR model, I think it is even better than Must Win Battles.
We can add a link to it, it is slightly different philosophy, but there are also important changes being made, possibly quicker than in the other model.
Kaija: And when you mentioned about changes, it brings to my mind that acquisition, and especially integration, are management of change.
And some say that change management is when you have to repeat yourself 7 times, some say even 12 times.
That was actually a fusion that was made through stock trade and it looks rather symmetrical to an outsider. But when the management of the company, at least traditionally and sadly still, show a set of slides to explain the reason for the acquisition
It is interesting when there is not a buyer or seller, rather three entities that come together. I wish them all the best. and then expect their staff to accept that. But the employees won't commit to that.
And that makes me think of the benefits of a platfrom like Midaxo's. The matters, facts and processes, information that needs to be shared, is accessible to everybody. Do you have any tips for this kind of situation?
Hopefully that gives people more time for communication, building the culture, and that management could spend more time with their employees.
This was our idealistic thought behind it, and we have managed to progress with it. 0:35:04.000,0:34:17.000 Sami: Yeah. The last deal I got to be part of was between Abagus Diagnostica, Labrox and Kaivogen, they make diagnostic systems
Kaija: Well I would come back to the Must Win Battle or the OKR concept, that there needs to be a leader. Or a leader is created from the participants.
But it's crucial that everybody will get to the same level, agree on what they want to achieve and how each unit works.
What is also important is that in these kinds of situations they need to be able to decide what not to do, since you cannot change everything all the time.
For example, in the case of Datex-Ohmeda, we knew that Ohmeda had very a complicated and expensive logistics system, but we had so many other issues to solve that we left that out.
Then we informed the others that we were going to leave it out and the reason behind it.
Sami: Right. We could still look closer into your platform's development, how you created a mobile version of it. Here's the slide about it. Tell us more.
Kaija: This is basically a feature on a mobile phone, an app with which you can access the information, check out the pipeline, tye people involved in the project and so on.
I must say that we at Datex had very good teams. For example, when I left for Australia, my colleagues would ask if I could help them out with their cases
while I was there, collect data for them. But what would happen if another colleague had been to America and written a report while I was on the plane?
Then I would head over to a meeting as soon as I was off the plane, how would I get that information? That's when the mobile app is a big help.
With the app I can access all the data that has been added there, which new people colleagues have met, and so on.
Another good example is, one advisor we had in our cases, they would take care of a lot service acquisitions all over the world.
Or if you have a trade business, where the location is the key, how do you take photos or a video of that? Everything happens with your mobile phone these days.
Sami: Yes that's true. One Youtube episode I made was about support intelligence, such as Stealth Black makes with GPT 3 scripts.
Another thing, your company hosts a lot of seminars and you've got your own podcast too. During COVID year I got to be part of it too, when I was asked to come and
go through how to close a deal virtually. At Translink Corporate Finance where I worked, we had just completed a deal between Finland and USA.
There was just enough budget to fly once to New York and once to London. Everything else was done via Zoom, Teams and Virtual Data Rooms.
That was a perfect practise for us before COVID since during the pandemic we had several deals completed in which nobody met each other and everything happened virtually.
Do you think this is the way from now on? Has COVID changed the world for good when it comes to handling acquisitions?
Kaija: Yes it clearly has. Business acquisitions have now been done virtually. In spring 2020 when COVID really got going, acquisitions stopped alltogether.
But during the last quarter of 2020 and this year the activity has picked up again. But a lot happens still via Teams or Zooms or other virtual services.
Clearly the receptivity of digital services is much better now. And it will intensify even more still.
People can act more naturally as well on Teams or Zoom calls these days, even if they haven't met the participants in person before.
Especially in integrations, meeting people in person is very crucial. But once you have met once and created that contact, the time is better spent via virtual meetings.
One of the biggest reasons why I left Datex-Ohmeda was that I had travelled a lot when I was in charge of sales and I had thought about leaving before the acquistion happened.
I had to make the decision and it felt unfair to leave when we had to divide people. So I decided to stay for a while.
The amount of times I had to fly, it was terrible. And when the integration process goes on, it includes even more flying.
Once I had done it for 16 years, I decided that it was time to do something else.
Sami: Yeah, when I worked in London it was quite common for me to fly 120 days per year. It is quite tough.
Although I probably shouldn't say, it was in the nineties and that's when bankers would fly in business class and that was pretty cool.
Kaija: We did not! During my Instrumentarium days, we kept a close eye on the costs and flew in tourist class. During the acquisition we were able to go business class.
We also had this case where we had to decide which of the two sales managers would come to us and which would go to Becton Dickson
It was my job to travel to meet this other manager who was in Asia. That was both the first and last time I was in a first class lounge as this manager flew in first class
I was happy enough when I got to fly in business! After the meeting when I got back, I told my colleagues that this individual wouldn't be a good fit for our company culture.
Sami: Yeah, I have to clarify that we investing bankers haven't flown in business class for about 15 years now.
I personally don't miss the travelling times. I have got a family, house and dogs here.
Kaija: I lived in America for 4 years. I was sent there by Datex and I travelled a lot there as well when I supported the sales teams and created connections to doctor gurus
I used to laugh with the cabin crew that I flew as much as they did, but they would get to go on holiday at the end of their journey and I would start my work.
Sami: Yeah true. But you have had a great career, and it has developed quite logically, when I think about it now, after learning more.
I believe that Midaxo will continue to become an even greater global company as time goes on
Oh, I must explain these work of arts, this is called Analyticity and that is definitely the theme of this episode, how analyticity can be brought into acquisitions.
So, we have talked a lot about Datex-Ohmeda and all the acquisitions related to it. The other half has focused on Midaxo and the help it can give to acquisitions,
and how to use these databases in their processes. Do you have any other matters you would like to talk about?
Kaija: Well, it definitely looks like business acquisitions are not slowing down, quite the opposite. And using an acquisition to grow your business is commonly used strategy.
That is what we at Midaxo are trying to help with. Technology developes rapidly, and we need to constantly update our platform as well to stay on top of the development.
It's a continuous challenge to make sure that everything syncs together. But I believe that this is the way to improve the acquisition process.
Then we have more time for communication, management of people, management of cultures and creating the value, as the value is created from the people after all
Technology and the platforms are necessities but you need to be able to convince the people and to motivate them to accept the change and to work towards the common goal.
Sami: About that, now when you have planned acquisition processes and due diligences, tell me which are the most important stages in due diligence you should focus on?
Do you think due diligence is the driving force within the efficient business acquisition?
Kaija: Well I wouldn't start from due diligence, I would focus on the value we want to create. I have got a couple of clients I have consulted in the past
I have asked the management directly what is the reason they have made this acquisition. They haven't been able to give me a direct answer! Or they have said 'growth'
Sami: They have wanted to do a strategic business acquisition
Kaija: Instead, they should think of creating value, and also think of the options, what are the different possible scenarios and how the value is created then.
When it comes to due diligence, there are certain risky needs, when in legal due diligence you have to analyse the finances if they are as accurate as imagined
and that there aren't any contract risks and that is all very understandable. It's common these days that AI reads and analyses these reports.
But then we should focus more on how the management has been done, why the decisions have been made that way, what information the decisions have been based on
what is the business culture like. Communication during acquisition and integration is not utilised enough.
Sami: Yes, so the culture due diligence is not given enough attention and it should be improved, and business due diligence as well.
Kaija: Yes and it all starts from the value. When it comes to the culture, these days there are tools with which you can compare different kinds of management styles.
They can be done online simply enough, and they can give you some idea and create questions at least. Obviously answers can only be gotten once the acquisition has happened.
But the questions are genuine and they can be looked into during due diligence.
Sami: Great. My guest has been Kaija Katariina Erkkilä and we have discussed business acquisitions and the applications that are used during the process. Thank you!
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