Kevin Ford has a theory for why more than seven in 10 mergers and acquisitions fail, and it has little to do with profit margins or revenue projections.
“The business is still about people,” Ottawa’s 2017 CEO of the Year told the crowd that packed a ballroom at Kanata’s Brookstreet Hotel on Thursday for his keynote speech on how to execute successful M&As.
Ford, the chief executive of Calian Group, has led his company through six acquisitions during his seven years at the helm. All those firms have hit the financial targets Calian had set for them, he said, but just as importantly, their workforces were able to seamlessly transition into Calian’s growing team without major growing pains.
In a corporate world increasingly obsessed with algorithms and big-data analytics, Ford’s approach to evaluating potential acquisition targets still comes down to an age-old axiom: If his gut’s telling him it’s not a good deal, it probably isn’t.
The Kanata firm’s affable boss recalled sitting down for a meal with the CEO of a company Calian was thinking about buying. Almost instantly, he said, he had a bad feeling.
“Within 10 minutes of that brunch – it was like speed dating – I knew this wasn’t a company for us,” he told the audience gathered for the CEO Talks luncheon event hosted by OBJ and the Ottawa Board of Trade. “If you meet with the leadership of the company, you will get some vibes with regards to, is this person someone I want to work with both short-term and long-term.”
A good cultural fit requires the buyer to understand not just what makes the acquisition target tick, Ford said, but what its own culture is all about as well. Calian regularly surveys its employees to get a clear handle on their values and attitudes toward the company, a process he recommended all firms emulate.
“The question you’ve got to ask yourself is, what is your culture and how are you assessing that culture?”
In his first public speech since suffering a “cardiovascular event” on Easter weekend, Ford also urged his fellow CEOs and executives to ensure they have a clear playbook before embarking on the M&A process. Too many companies, he said, snap up competitors for the sake of making an acquisition, with no clear idea of how they’ll fit into the acquirer’s long-term plans.
“If you’re looking for Kevin Ford’s recommendation on acquisitions, have a strategy and then figure out how acquisitions fit into your strategy, versus the other way around.”
Ford said that when Calian purchased Primacy Management in 2012, for example, he had a clear goal in mind. The company ran medical clinics in Loblaws supermarkets across the country, and Ford saw the deal as way to expand Calian’s footprint in the health-care space beyond the clinics it was already servicing on military bases.
“When I bought Primacy clinics, I wanted to make a statement to the world that we were going to go national in health care,” he told the audience.
Calian has become much more strategic in its approach to acquisitions over the years, he added. Ford noted the company recently created an M&A office led by director of corporate affairs Terri Dougall, a former executive at IBM who now works with a search firm to find potential targets that fit with Calian’s long-term acquisition roadmap.
As much as acquisitions are about people, the CEO also cautioned companies to do their homework and take a hard look at all the key numbers before signing on the dotted line.
“Imagine if it was your own money. What due diligence would you do?” he said, noting he has to answer to Calian’s 2,000-plus shareholders if a deal fails. “I’m talking about their money. I think they would hope that I’m doing some strong due diligence.”
Ford also stressed the importance of having trusted advisers to lean on throughout the process.
“Don’t do this at home,” he said to laughter. “I’ve done six now, and I’m still learning. Find someone who’s done it and pick their brains.”
He offered another key piece of advice: Don’t get too attached to the thrill of a deal, because it might not pan out.
“That’s my challenge,” he said to knowing chuckles from the crowd. “I’m a pretty passionate guy. Just don’t get emotionally tied and do what’s right for your company.”
Ford, who is now back in the office, briefly choked up when thanking the crowd for all the well-wishes he received while recuperating over the past six months.
“I felt the love, and it’s been emotional,” he said. “It’s been a journey, but I’m back.”