CFO 4.0

193. CFO Stories: The Art of Acquisitions and Capital Raising with Josh Schenker

September 17, 2024 • Hannah Munro

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Join Hannah Munro, as she speaks with Josh Schenker, CFO of Aditude, about his journey in the world of strategy consulting, corporate development, and now scaling startups. In this episode of CFO 4.0, Josh shares his experience raising capital, navigating acquisitions, and the evolving role of the CFO.

Key Takeaways:

  • Lessons learned during the pandemic and how to target investors strategically.
  • How Aditude evaluates and executes acquisitions, including key criteria for selecting target companies.
  • A deep dive into the multi-faceted due diligence process for both buyers and sellers.
  • Top Tips for CFOs: How to prepare for fundraising, acquisitions, and scaling operations.
  • The importance of aligning people and culture during the M&A process.
  • How to build processes that allow for seamless integration of new businesses.

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Speaker 1:

Welcome to CFO 4.0, the future of finance. The CFO role is changing rapidly, moving from cost controller to strategic visionary, and with every change comes opportunity. We are here to help you take advantage of this transition to win at work, drive your career forwards and lead with confidence. To win at work, drive your career forwards and lead with confidence. Join Hannah Munro, managing Director of ITAS, a financial transformation consultancy, as she interviews key experts to give you real-world advice and guidance on how to transform your processes, people and data. Welcome to CFO 4.0, the future of finance.

Speaker 2:

Hello everybody and welcome to this episode of CFO 4.0. My name is Hannah Munro and with me today is Josh Schenker. Now, josh is the CFO of Attitude and we're here to talk about a few different things. Actually, josh, is that we've got a wide agenda for today's session. So great to have you on the show, josh. Thank you for joining me. So tell us, josh, tell us a little bit about your journey to cfo sure thanks, hannah.

Speaker 3:

Um I started my career um back in the day I was in uh strategy consulting. I came out of uh I was doing a master's program and um decided uh that uh I was really interested in kind of how companies work um and the processes in terms of how M&A is put together. So I started in strategy consulting helping uh companies uh on the M&A side. Uh that was corporate clients as well as private equity clients, work on due diligence projects and some other strategy projects as related to that, and it was sort of a great, great introduction into the world of finance and M&A. I got to really see a bunch of different industries, how they work and kind of dive into those specifics. I then took that to go in-house to a large tech company where I worked on corporate development. So I actually was running M&A deals for them, divestitures, m&a, strategic partnerships, all the things that kind of flow through corporate development. So I got to work on small acqui-hires up to billion-dollar transactions.

Speaker 3:

But as I kind of looked at my career, I wanted to learn more and more in terms of how to actually run a business. So I had the opportunity to move within a business unit and do business operations and strategy um, and spent a few years uh working on uh projects, uh, with the general manager of that group, uh. So, ranging from you know the nuts and bolts in terms of just putting together a financial plan, uh for the business, uh, and seeing how we're budgeting for business and seeing how we're, you know, budgeting for the year and how we're, you know, progressing against those goals, to large strategic, you know processes in terms of should we go invest in new areas of of interest or or not. So I spent a couple of years doing that Um, and then got the entrepreneurial itch, uh. So I, you know, up until that time, I basically spent my um my career, uh, at large uh companies, um, so large uh consulting companies or you know that large tech firm. And at that point I decided, you know, I think I want to have more impact in the roles that I'm having. Not that it's you know that you can't have impacted at a big company, but it's just different when you're at a, you know, 10, 20, 30 person company. There's not, you know, there's not teams and teams of people supporting you. You have to sort of figure things out as you go.

Speaker 3:

So I joined my first startup call it. Four or five years ago it was called Cleanio. It was in cybersecurity space around ad tech tech, and I spent close to three years there, took it through series you know, series a into actual acquisition towards the end of 2022 and so we sold that business to a larger cyber security company. From there I was a COO at an e-commerce data startup and then the Attitude opportunity where I am today kind of came out of a couple of my relationships from my time at Cleanio, because actually Attitude was a client of ours and I got to see Attitude in this interesting inflection point where they went from Jared, who's the founder and CEO he was doing consulting and then he was shifting to more of a SaaS business.

Speaker 3:

So I got to see them launch that product and really scale it up that product and really scale it up and through our contact, you know, through you know some mutual relationships that Jared had with some of the folks at Cleanio and the folks I worked with at Cleanio, we got introduced and Jared was like, hey, why don't you come on board? We're looking to scale this up and continue sort of powering you know powering the growth and looking for someone who can help on the CFO side as well as on the corporate development side, and that's kind of how I landed at Attitude.

Speaker 2:

Amazing and I really love the fact that you've come from a slightly different background, because a lot of the CFOs historically that I've spoken to have all come from sort of a traditional accounting or CPA background. And what's really interesting is I'm seeing as a bit of a shift, I think, happening in that CFO role. The commercial element of it's becoming almost more well-recognized is that you know you can get people in from different backgrounds.

Speaker 3:

Yeah, I've had to. That's, um, something I've learned over the last couple of years as I've gone into the startup world and been CFO, um, at a couple of CFO or COO at a couple of different spots. Stops, um, I definitely didn't appreciate the level of, uh, you know, sort of accounting and tax and, uh, sort of the nuts and bolts of actually running a business. Um, but uh, I'd like to think I'm a somewhat quick learner so I've sort of learned enough to help me sort of get by and obviously had good mentors and good advisors sort of helping me along the way, sort of training me in terms of, you know, the key components on that side of the business, so that I can augment, obviously, the pieces on like the strategic and finance side that you know was, you know that I worked in for my history to date.

Speaker 2:

And what's interesting. So obviously you mentioned that you took one of your other or previous organizations through Series A, and I think Attitude as well has just recently been through a Series A funding round, so I'd love to learn. So let's just talk about like what does that process look like, particularly in Series A?

Speaker 3:

Sure, yeah, so I think, as you mentioned, so I helped Cleanio do a Series A back in 2020. That was definitely an interesting one, given that we went out to market maybe a month before the pandemic started and you know, I think, that there was definitely a couple of sleepless nights as the pandemic was hitting and over, you know. Basically, capital dried up, you know, overnight, where VCs weren't sure what was going to happen. I mean, I think the world wasn't sure what was going to happen and so being able to go through that process in the middle, you know, at the beginning of the pandemic, and able to raise money, I think was an interesting challenge, but definitely taught me a lot. Um, an interesting challenge, um, but definitely taught me a lot um attitude. Also, we raised a, our series a, around a year ago, um, a little more than a year ago at this point, um, very different sort of um sort of flavors of of uh, raising capital, um.

Speaker 3:

Cleanio was sort of a more classic early stage startup that was raising money in order to grow the business to the next level and sort of continue on that train of raising capital every couple of years and trying to scale up. Like any early stage startup is High growth, early stage startup versus Attitude. You know, any early stage startup is high growth, early stage startup versus Attitude. As I mentioned before, you know, jared had started this as a consulting business and had bootstrapped it until he raised we raised capital last year, had been funded basically on operations, and so different profile, type of company, different use case in terms of what we were trying to use the money for.

Speaker 3:

So in the Cleanio world we were funding operations, funding growth from an organic standpoint. We're trying to build growth from an organic standpoint as opposed to on the attitude side. This was more strategic capital or growth capital. This was more strategic capital or growth capital. Even though it was the first dollar Zim. It was more what I would think of as kind of growth capital in the sense of using it for either some strategic marketing and branding or acquisitions, and that's what we've sort of been focused on in 2024 in the two transactions that we've done to date. So, you know, still obviously keeping our lean and mean approach to operating the business. But how do we pour some gasoline from an inorganic perspective to, you know, match the organic growth that we're seeing?

Speaker 2:

And you mentioned that you learned a lot in that first round, Obviously, fundraising during such a challenging time of COVID it must've been incredibly hard because there was so much uncertainty and obviously we work with a lot of SaaS companies and it was like it felt like for a lot of the ones that we were talking to that the floor just dropped out of the bottom of all of their normal funding streams and approaches. So I can understand it must have been very challenging. So what did you learn? Did it change, I guess, your perspective on what makes a successful series a funding application? Did you do anything different to raise during that time?

Speaker 3:

different to raise during that time. Well, I think, look it comes. It comes down to your performance. Ultimately, it comes down to your performance uh that you're you're generating. Even when we raised in 2023, we were also in a somewhat sort of challenging uh environment, uh, coming out of some of the uncertainty uh that we had in 2022 and early 2023 in terms of the economic sort of market and also, you know, capital drying up, not to mention that obviously, we're in ad tech, which is a more challenging space. You know it's not AI or the buzzword-y industry.

Speaker 3:

Yeah, we think, you know, we believe in it and we believe that we obviously could be extremely successful, which I think our investors do too. But, in terms of you know we believe in it and we believe that we obviously could be extremely successful, which I think our investors do too. But in terms of, you know, going out to market is definitely as a level of challenge, fundraising processes. It starts with your numbers. It starts with the fact that if you have a strong product and a strong you know, strong proof points in terms of, hey, you know, we've been able to build a really good business, you know, with either limited resources or no resources, that there's something here. So, starting there, I think is is going to be, you know, it's always going to help you, um, it's always going to help you.

Speaker 3:

You know, get your, get a leg up and get you started, um, and then, obviously, being able to chart out the path of you know how do we make this into a big business, so sort of selling, selling the dream, selling the selling the upside, um, you know, I think in challenging markets you need both right, they want to see, obviously, proof, uh, that you've been able to do it, um, and then also that you have a, you know you have a big, you know you have this sort of the big picture uh outlined and that, um, you know you're going, you're going after something that can be really big.

Speaker 3:

So, um, you know, I think that's the, that's the message, the messaging that we, um that we went out to market with um and, you know, got a lot of no's, as as you would in any uh raising, you know, fundraising process, but found investors that believed in us and were willing, willing to to um, willing to make a bet, ultimately willing to um, willing to make a bet, ultimately, um, that might've been, you know, against the grain or at, you know, sort of uh take a challenge and and um, you know sort of uh, you know, believed in what we were uh trying to trying to do here, um in both, in both scenarios.

Speaker 2:

And and I guess part of that is making sure you find the right investors. So what was your process in both, I guess, who you're going to approach for funding and how did you decide in the end, which investors to go with in terms of, did you have much choice over which ones you decided to go with in the end? So, approach in terms of, did you have much choice over which ones you decided to go with in?

Speaker 3:

the end. So, approach in terms of who we reached out to, I mean, you start with a target list. I mean this is like any sales process, right, it's a numbers game, right. So you have to go reach out to sort of a wide array of folks. You're trying to see, okay, who am I connected with, who have I talked to in the past as well as you know, who are my, who are mutual sort of connections that can kind of get us in front of the right people. So you start with hey, here are the people that have either invested in our space in the past or might you know sort of be investing in the space, and try to find those connections, um, and then start those initial conversations, um, as I said before. And so you kind of get, you know, you start to whittle down the list of people who are interested um versus not Um and then, uh, the folks who, um, the folks who are really interested, start to bubble to the I wouldn't say the bubble to the top, but they start to come out as like, okay, you know there's, they're, they've invested in our space and had had some good outcomes, um, uh, or you know, we just know their sort of the reputation, uh, and then they're obviously showing interest on their end, uh, getting excited in terms of what we're building.

Speaker 3:

And, uh, as you go through the process, it starts to uh come clear in terms of who's the right, where the right fit is for you. And you know, sometimes you have options and sometimes you don't. But sometimes it doesn't really matter, right? Sometimes it's you only have one option, but those are the right. You know that's the right person or the right firm for what you're trying to build.

Speaker 2:

You know moving forward, and what would you like knowing what you know now? Um, with attitude, what would you have done differently with that? That?

Speaker 3:

that series a round I'm not sure we would have done much differently. I think that at the time, uh, we were more deciding do we want capital or not? Not necessarily that, oh, we need to go raise capital, and who's you know who are the right, who's the right people. It was more do we want one, do we want, do we want capital right now? Do we want to sort of raise money to go and do some more strategic things and try to scale up in an inorganic way, or not? And then who's the right person to help us go and do that? And so, you know, I don't know if there was something different than we would have done.

Speaker 3:

Um, I think it's just we, you know, we came together as a leadership team, um, and decided that, um, not only were were our investors, who we have now have been extremely happy with, uh, that's Volition Capital, uh, out of Boston, um, and so not only were they the right, right folks, cause they had sort of proven that they had some success in the ad tech space and, um, you know, kind of knew what needed to be done to be successful there, uh, but also that we wanted to go and try, or, um, you know, try to scale up a lot faster than than we had been in terms of our even our organic growth, which was obviously great growth, uh, you know itself, in terms of even our organic growth, which was obviously great growth itself.

Speaker 2:

And I guess what made you make the decision that now is the right time to raise capital, Because obviously you were profitable prior by operations driving revenue and driving growth what made you make that shift?

Speaker 3:

as an organization.

Speaker 3:

Yeah, it was a, you know, we were looking at the two options, right, we were saying, hey, do we just fund this, do we try to continue, obviously, funding operations, you know, from a profit and invest in things in a sort of a slower, more methodical manner?

Speaker 3:

Maybe do some smaller pieces of acquisition, you know, based on just, um, you know, with the cash on hand that we have, and try to be a bit more strategic how we go and do it, um, or do we go and raise, raise, raise a larger amount of money and that gives us the ability to go a lot faster, right?

Speaker 3:

And so, um, we decided that we wanted to, uh, we wanted to take a bet on ourselves and believe that we could do things a bit faster, and we thought that the timing was right in terms of the market and our ability to sort of execute against it, to go and do somewhat of a roll-up strategy in terms of our space and be able to go and acquire other businesses. And if we had not taken the money, I think we would have continued to try to do that as well. It just would have taken us a lot longer. And so we just thought it was a great opportunity to go and raise the capital um to try to do it quicker, bigger and better and and did you evaluate different ways of approaching that funding?

Speaker 2:

you know, like obviously there's lots of different ways to raise capital for, for m&a and acquisitions like Like was it something that you did, you always know you were going to go down this route, or did you evaluate different?

Speaker 3:

options. No, no, as I said, so we looked at, I want to say three-ish primary things. One was fund from operations. You know we're going to continue, well, let's grow, let's continue to grow organically, take those profits and then invest it in potential acquisitions as we go. So you know, stay lean from operations but also look at potential debt to add on. You know, as we want to do the acquisition, so you know, still stay within kind of what we can. You know we can sort of bite off, you know, without choking. But you know, maybe augment a little bit with some debt slightly larger acquisitions than what we would have been able to do had we just tried to do it with operations. And then the third was obviously go out and raise capital and be able to do acquisitions at a larger scale quicker.

Speaker 2:

And you've obviously you've talked a lot about. One of the primary drivers behind looking to raise the capital was obviously acquisitions. So tell me a little bit about how you approach your overarching acquisition strategy. Did you already have some acquisitions in mind, or was it that you wanted the capital and then went out to market to find them? We had acquisitions in mind or was it that you you wanted the capital and then went out to market to find them?

Speaker 3:

we had acquisitions. We definitely had uh some acquisitions in mind. Um, jared, the founder, obviously has been working in this industry for 10 plus years and so knows a lot of the players and knows, um the folks that um kind of were interesting to him in terms of whether it was, uh, just business combinations because they're competitors and you know it makes sense for us to combine with them or new products that we had on the roadmap that he won, you know, was thinking about kind of in a build versus buy perspective. So there was definitely companies that he had in his mind. And then, once we raised the capital, though, we definitely we worked with Volition a bunch in terms of, okay, here's kind of the initial list and then even on follow on lists in terms of companies that are in our space that we should keep the can you know sort of knock on the door and see if there's any anything interesting, anything interesting here, and so we spent, we spent developing that list.

Speaker 3:

So we started with an initial list that that can. That got us to our first acquisition and then, as well, as the second acquisition, and we continue uh to um, continue to add to that list in terms of companies, uh, in our space, um, and you know, try to keep it um sort of updated as we go, um, so that we can identify opportunities as they come, come across. Um and um. Yeah, keep on sort of developing it as we go.

Speaker 2:

And when you were assessing those lists, how did you decide what to either prioritize or what was going to make a good acquisition? What are some of the things that you were looking for?

Speaker 3:

Yeah, the way that I look at it is in three. You know, the target list is sort of in three different realms, right. So there's companies that are doing either the same thing as us, are pretty much the same thing as us. So we're you know, we're extending obviously more customer customer base there, more customer customer base there, um. Then there are companies that have additional products or features that are already on our roadmap and are in our space, um, but it allows us to sort of extend beyond our. You know, it's built onto our, our platform, right. So extend our platform beyond what we do today, um.

Speaker 3:

And then, third, are opportunities that take us maybe outside of our current industry and that sort of play to our strong suits. We have analytics that we're doing in the ad tech space. Can those analytics get broadened to start to be interesting in other, in other realms and other in other industries? And is there an acquisition that makes sense to sort of combine with what we do, to allow us to go and move into a different industry and start selling there? So it's really those three sort of filters that we've been looking at. I think that primarily in the first two, but obviously we're trying to be, you know we still want to be opportunistic.

Speaker 2:

As it relates to the last one, you know, as we start to grow and grow, and grow and maybe, you know, one day move beyond the ad tech space that we're in, the ad tech space that we're in Amazing and I guess, in terms of once you've figured out that product-wise they add value into the organization, I guess are there any things that you look out for that would make them, once you get to know them more, that would make them not a good fit? Are there any sort of warning signs that you're always really cautious around any sort?

Speaker 3:

of warning signs that you're always really cautious around. We so, beyond just, you know, filtering, obviously for the three things I mentioned before. There, you know we're also, we also are looking primarily at companies that are either breakeven or profitable. So we're not looking for companies where you know they're burning a bunch of cash and we're gonna have to either turn it around or you're betting on high growth for you to get out of a negative profitability state. So I think that that's one thing that definitely would probably, you know, sort of turn us away pretty quickly.

Speaker 3:

Other, you know, some other things I'm trying to think like other stuff from a filter perspective that would potentially turn us away. You know, fit with the, you know the founders or the people that we think that we're going to be bringing on. That's definitely something else, you know. So if there's a, you know, as we go through the process, if we feel like it's not the right fit from a people and cultural perspective, that's also something that will, you know, make us sort of think twice in terms of doing a deal. And, you know, as we look at some of the more sort of product specific acquisitions, um, you know, if there's questions that we have in terms of the product itself, um, and the validity of it, or the? Um viability of of the product, um. That will definitely make us sort of take a step back and say, okay, you know, do we really want to do this acquisition, or should we pass?

Speaker 4:

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Speaker 2:

And when you were going through your shortlist with the founders and the parts were there any that? You decided to do that. Was there a, I guess a few that you? You actually decided? No, I don't.

Speaker 3:

For whatever reason, these aren't a good fit for us we try to keep our, we try to make the list. At least initially we tried to keep the list in terms of actual opportunities that we thought were interesting, like we thought were actually things that we would want to actually go in and actually try to filter those out before we get to the stage where we're actually talking to people. And some of that is just helpful. Volition does some screening for us. They're in market as an investor and so they have different relationships with bankers and other folks that are sort of in the industry so we can get a you know, hopefully a pulse on a company before we actually reach out to them to get some you know sort of basic understanding of you know how they're, how they're operating and you know know should, should, we be interested in them, and so we try to filter that stuff out.

Speaker 3:

Um originally and in the case of you know, the past year, generally we've been talking to companies that were um interested, you know, actually interested in in, in acquiring um versus, you know, getting to, you know further along and then deciding, hey, like this is the right fit.

Speaker 3:

So sometimes like the biggest thing in terms of not acquiring a business has just been more timing or just interest, you know, on their end in terms of actually selling. So sometimes it's just okay, we're not, you know, we're not really in market and we're not really ready to go and sell. Or, you know, maybe they're thinking about doing something like they'd rather, you know, stay as an independent, and that's fine. Like we're not, we're obviously not forcing anyone to go and do this, you know we obviously we're interested in their business because of, you know, for a bunch of different reasons. But at the end of the day, you know, this is a, it's a marriage of sorts, and so, uh want to make sure that, you know, both sides are happy with, uh, with the outcome. And so we try to, um, you know, try to find the folks that are, um, you know, ready to sort of dive in with us.

Speaker 2:

Um, and one of the things I'd love to talk to you more about is the due diligence process, because certainly, when I've spoken to a lot of customers that are either pre or post, it's almost like in some instances the depth of the process is quite unexpected, like all of the things they're going to have to do. So, yeah, you've done this for so many years.

Speaker 3:

Tell us a little bit about like what, what you've learned about you doing this and I guess how you approach it and I have the um, I have the benefit of having done M&A at a large company, having sold the business, uh, so being on the the opposite side of that table, um. And now I'm having doneA at a large company, having sold a business, so being on the opposite side of that table, and now I'm having done it at a small company twice, and so I have a true appreciation for all sort of sides of it in terms of how to approach the deal and how I would want someone coming to me and sort of facilitating the deal, and so I try to make it as painless as possible and try to be as transparent as possible and communicative in terms of the process. So that starts with due diligence, right, and just making sure that they understand that, look, we're going to take a hard look at, obviously, all the different pieces of your business. It's not, you know, this isn't anything you know that we're trying to like. You know, there's not a gotcha here. This is more just, we're trying to do a risk assessment and make sure that there's nothing that would preclude us from being able to, you know to to buy the business.

Speaker 3:

The normal, the normal processes, is, um, you know, legal due diligence, and tax due diligence and financial due diligence and technology due diligence and and identify any issues that um that we need to clean up um. And so I think it comes down to communication and transparency, um, where, the more that you're um being being upfront, um and sort of honest and transparent with the other side, it makes it a lot easier because they're not wondering, oh, what's going on? Or why are they asking this stuff, or um, are they trying to, you know? Are they hiding anything? Um, you know it's. It makes it a lot smoother in terms of a process If you're collaborating and, and you know, pushing on things together as opposed to, sort of like, in an acrimonious way of you know, you know, way of doing things yeah, I guess you got to live with each other once you go through that process, so you can't.

Speaker 2:

There's no point making it really painful and then expecting everything.

Speaker 3:

I tell my lawyers that, um, I tell my lawyers that, like we, we don't need to win like the during the process of doing, like due diligence, like due diligence and the documentation process. It's not about like that's not like we don't need to win there. The winning is getting, you know, acquiring the company and then growing the business. Uh, so if we waste our time trying to win during the deal, um, it slows us down in terms of what our ultimate goal is in terms of growing the business and um, so I try to keep everyone sort of focused on the prize, um, and not get lost in um, in some of the details that can bog down in acquisition.

Speaker 3:

Um, they're important, right, you don't want to ignore, uh, you know either red flags as it relates to diligence, or you know give up. You know all of you know your protections as it relates to, you know the documentation side. But, once again, you know making sure everyone sort of understands like, let's keep things sort of middle of the road, market, market terms and sort of. You know reasonable expectations on those pieces and you know sort of focus on, okay, how can we like get this done as quickly as possible and actually get to building the business together?

Speaker 2:

And you mentioned there are different parts and sections to the due diligence process. So for those that have never been through that you mentioned I think you mentioned legal, obviously tax what are the different elements of due diligence that a founder or cfo that's being acquired can expect?

Speaker 3:

so, yeah, so it's. It's all parts of the business, um, so, legal, um, legal, tax, financial, um, a tech, hr, um, so really, every piece of the business we're looking at to make sure there's no big liability. Ultimately, a big liability that we weren't aware of or something that is so bad that we wouldn't want to touch it, sort of precludes us from actually doing the deal. Luckily, I haven't gotten into that things, but I've seen some things where it's a higher risk and we've had to sort of go back to the drawing board and, um, you know, work with the work with there's no clauses in there that would preclude us from moving over a contract as part of an acquisition. You're making sure that the company was set up correctly and there's no issues, there's no investors or former employees that are going to make claims against the business. That, um, you know, would uh create headaches, headaches for you in the future.

Speaker 3:

On the tax side, you know, uh, companies, you know, operate at different, you know, in different ways. Uh, each company will operate in different ways. So, you know, have they, um, have they been paying their taxes? Uh, you know correctly, um, maybe they have, but they have a different approach and, um, you know correctly. Maybe they have, but they have a different approach and you know you have to sort of take a take a view at. You know how. You know what do you think is the right way to do it and how does that? How does that apply? Sort of moving forward to the business that you're buying On the HR side, are there any employment? You know issues that have come up in the past that need to be, that you need to be aware of.

Speaker 3:

On the tech side, obviously you're looking at, you know how's their security, how's their. You know how's the foundation. You know foundational pieces of the business, not only products like how does it operate, but you know, is it scalable? Are you? You know, are you buying something that's sort of duct tape together or is it, you know, have a strong sort of foundation that we can build off of?

Speaker 3:

So, really, looking at all the different pieces, you know the CFO. You know, being the CFO at a small company, you're probably focused on all the aspects outside of tech aspects, outside of um, tech, um and so, and depending on if you have, you know, a head of sales or not, you might actually also sort of be facilitating um sort of the commercial due diligence, uh, as relates to, you know, sales and sales ops and those pieces. So it really depends on how big your company is, um, and what components you're going to be tasked with focusing on. But, as an acquirer, we're going to look at everything you know, as I mentioned before, just to make sure there's no big risks or liability that are going to come out of the woodworks in the future.

Speaker 2:

So, yeah, that's kind of how we approach it so yeah, that's, that's kind of how we approach it. And so if you were going to give sort of top tips for a cfo going into being acquired, what would be the top tips, um, for them? Like, how would you advise them to prepare? What sort of things are they thinking about ahead of time?

Speaker 3:

because you know, I think this is I and I think this is this is the similar advice that I would give for someone who's going to raise as well, right, um? I think having your documents, your data room ready, or or having a very clear picture on where the data lives, um, is going to make your life so much easier because you're going to get you know whether it's on a raising capital or on an M&A side. They're going to send you, they're going to send you, a data request list and it's going to ask for a lot of this same. You know it's. It's not, it shouldn't be surprising. Right there, you can ask pretty much any, any lawyer or banker, for a, for a standard list, um, and they're going to be, you know, similar to probably 98% of it, or 99% of it is going to be similar across all the different lists. So you can. You can. You can get prepared in terms of what a company is going to be looking for or investors going to be looking for, in advance, um, and it just makes things a lot easier if, if things are ready, um, ready to go, as opposed to waiting potentially weeks to get certain pieces filled out and provided to you.

Speaker 3:

So if you're looking to do something quicker, obviously having those documents, at least that initial set of documents there's always going to be follow-on questions and follow-on analyses that need to be prepared and that's fine.

Speaker 3:

But getting that sort of initial set of documents uh, ready, um, or having a clear sort of view on, okay, this is where all this data lives and I can pull it together in a few hours if needed, um, that's kind of the first, uh, the first component.

Speaker 3:

That I think is the biggest thing that I think would be helpful for people in my shoes at other companies if they're going to raise capital or going through an acquisition.

Speaker 3:

The other piece is more sort of deeper into the process, when you're getting into the documentation phase, disclosure schedules specifically. So having that data room ready or having the sort of an eye in terms of where the data is will help out at the beginning. But as you go through the process and you get into the documentation phase and the disclosure phase, having a pretty good understanding of what potentially will need to go into a disclosure schedule is also something that takes time and obviously the quicker, the quicker you can do it, the quicker the process can go. And so having you know either someone who's you know sort of cataloging different pieces that go into something like that, or having, you know, just having a good handle on your contracts and your other documents and anything else that might go into a disclosure schedule. That's just going to make things easier as you go through the process and trying to close the deal.

Speaker 2:

And do you? Are all disclosure schedules created equal?

Speaker 3:

So do do no, not, but there are. I would say that you can prepare or you can have an eye towards it, Right so?

Speaker 1:

I.

Speaker 3:

I've even told you know one of the projects that I told our lawyers so our lawyers to work on for us, and we're not looking to. You know we want to have a um, a clear picture in terms of where data lives and what are the. We have a you know, sort of an understanding of any. You know non-normal clauses that might you know need to be disclosed or things that could come up, you know as part of a due diligence, or things that might you know sort of get flagged in. You know certain reps and warranties that you're making as part of that process, and so just keeping a regular process in terms of making sure that you know everything is being cataloged will help you know in a huge way.

Speaker 3:

The other thing I think is more on like, sort of like on a financial, on the financial side is, you know, really just having having a strong sort of understanding of your numbers, which is kind of it sounds, sounds simple, it sounds sort of obvious for a CFO.

Speaker 3:

But as you go through the diligence process and you know sort of all the, you know the elements there, making sure that you know not sort of all the. You know the elements there, making sure that you know, not only you have the data readily available, but that you can answer the questions in terms of you know why a certain month, you know something happened in a certain month, and you can sort of answer the next level down, or even two levels down in terms of what's going on. It's just going to, you know, to enable you to sort of move things quicker, as opposed to every time you get a question you have to spend a week sort of digging through everything to figure out what's going on. So being organized in terms of, obviously, your financial data and things as it relates to your financial processes are going to just help in a huge way as you go through a capital raise or an acquisition.

Speaker 2:

And I am very aware that this has been such a great conversation I've slightly run over time, so I hope you and our listeners don't mind, but this is great. So I'm going to ask you on the flip side, right? So we talked very much about how you can prepare for being acquired. If you're looking to go out and acquire, what should you be thinking about when it comes to finding the right acquisitions and or preparing to go through that due diligence side? On the other piece as well, so, no, it's a great question.

Speaker 3:

So, no, it's a great question. I think that I think in terms of preparing yourself. So obviously it starts with a strategy, right, it starts with making sure that you're finding the right targets that sort of meet the needs that you need, I think. Then, on the other side, you know, in the same way that you want to prepare your sort of financial processes and operations to be ready for an act to be acquired, you also need to make sure that you have those processes built out to acquire right, because you are bringing in a new business, whether you're doing an asset deal or an entity deal, it's a new business that has new products and new components and new ways that potentially, people pay you or that you have to build people, and so really being strong and sort of like, okay, here's our current process.

Speaker 3:

And then understanding how they do their pieces is sort of the is the almost the biggest battle. You know at the beginning, right, it's like getting your. It's not just understanding. Okay, what's their? You know, what does their P&L look like? It's like, okay, well, I'm taking over this business as of this date. Okay, well, how do we, how do we go and build for build customers? How do we make sure that we were paying our vendors? How do we make sure that the balance sheet is, um, you know is appropriately, um, you know, reflecting the business and um making sure that your processes allow for bringing in and scaling uh to to, um you know, incorporating another business uh inside of yours, um is is something that you know. It can be challenging at times but once you sort of have built the processes and sort of the foundation, it can, you know it allows you to do multiple deals, you know, one after another.

Speaker 2:

Amazing. Yeah, a production line of acquisitions is what we're going for here.

Speaker 3:

That's the hope, that's the hope.

Speaker 2:

Well, thank you so much, Josh, and some great, great content in there and actually probably lots of things we didn't get time to explore, but it's been absolutely fantastic having you here sharing your knowledge, josh, and some great advice for those you know either thinking about acquiring or going through, or thinking about being acquired, on both sides of the story. So thank you so much for sharing your, your story and, obviously, your experience working with attitude. Um, before we finish, is there anything that you would like and you know? If you want to learn more about yourself, maybe your background or about attitude, where's the best place to find you?

Speaker 3:

yeah, well, we you can. Obviously, in terms of attitude, you can find us on our website, um and uh, that's attitudecom, um, and you can find us on linkedin and a couple other sort of social social platforms. I'm also on on linkedin, uh, as well, if you want to reach out to connect or sort of learn more in terms of my experiences to date. So, yeah, that's kind of where you can find Attitude and myself.

Speaker 2:

Fantastic, and if you've enjoyed this podcast or you have some questions you think I should have asked Josh as part of this piece, then please do reach out. If we ask him very nicely, he might pop back on and answer them for us. So thank you so much, josh, for joining me, and thank you to our listeners for tuning in, and I'll see you next time on the CFO 4.0 podcast. So for those of you that don't know what we do here at ITAS, so we are a financial transformation consultancy that specializes in sage technologies. Whether that is looking at a new solution, evaluating your current solution or just helping you to get the most out of your current setup, we can help.

Speaker 5:

But rather than me tell you all the reasons that you should consider working with us as a sage partner or a transformation consultancy partner, I'm gonna let our customers do the talking for us I tasked with there, from the from the sort of get-go helping us, you know, talking through what the process was going to involve, setting expectations, you know, making it clear that how much work we were going to have to put in to make sure that the project was a success at the end.

Speaker 5:

And then talking us through all our different options, looking through our current processes, making us reevaluate what was important, which elements we wanted to move across to the new system, how we wanted to configure our new system, and also kind of making us sit back and really think about what is the success of this project when we get to the other end, when we finish the implementation and we're in the system, what's success going to look like?

Speaker 5:

And actually, you know, putting that question back to us and really making us sit down and think about what is it that we, that we are looking to gain from? This whole process was really useful internally, making us really think about the key objectives and which areas maybe prioritise over others. It was also really helpful sitting down and thinking about it, rather than one big, huge project, actually splitting it down into different phases, sort of smaller, bite-sized chunks, which made it seem a little bit more achievable within the time. And then, thankfully, itas have been super flexible with us during this process because it happened to coincide our implementation with our first ever financial audit, which just took up huge amounts of our time that we didn't expect. So we did have to slightly push back some of our go live dates and thankfully ITAS were accommodating and actually helped us navigate through that process and I'd like to say that thankfully we're out the other side of our first days of go live and, yeah, loving the move to Intact.