16. Mohamad Ali, the CEO of IDG, Inc., on learning to be a good board member and the importance of giving back

November 15, 2020

Mohamad Ali is the CEO of International Data Group (IDG, Inc.), a private technology media, events and research company. He has also served as CEO of a publicly traded company and has served on many public, private, and nonprofit boards. In this episode, Mohamad shares what he has learned about being a good board member as well as the intricacies of boards through his wide range of experience on both the board and company leadership sides. He also integrates the importance of giving back and the support he received after moving to the United States as a child.

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Links

https://www.idg.com/

https://twitter.com/mhsali

https://www.linkedin.com/in/alimohamad/

Biography

His bio is available here: https://www.idg.com/about-idg-inc/

Mohamad Ali was appointed Chief Executive Officer at International Data Group, Inc., the world’s leading technology media, events and research company, in July 2019.

Prior to this role, Mohamad was CEO of Carbonite, a publicly traded data-protection and security firm, where he grew the company’s revenue four-fold, to more than a half-billion dollars in four years. Before that, Mohamad served as Chief Strategy Officer at Hewlett-Packard where he played a pivotal role in the company’s turnaround and led the decision process to split HP into two companies. At IBM, Mohamad acquired and integrated various companies to create the firm’s $8 billion analytics software unit. At Avaya, he oversaw the $2 billion services group and served as head of the company’s research labs.

Mohamad holds a B.S. in Computer Engineering, a B.A. in History and a master’s degree in Electrical Engineering, all from Stanford University. He serves on the board of iRobot (NASDAQ: IRBT) and was previously on the board of Carbonite (NASDAQ: CARB) and City National Bank (NYSE: CYN).

Mohamad was honored as 2018 CEO of the Year by the Massachusetts Technology Leadership Council, was a member of the 2018 Public Board of the Year by The National Association of Corporate Directors New England, was named a 2011 All-Star by Massachusetts High Tech magazine, was named a 2008 40 Under 40 honoree by Boston Business Journal, and was a finalist in America’s prestigious 1988 National Science Talent Search.

Article: “I am Living proof of the American Dream”

Quotes

Onboarding

I think one of the most important aspects of onboarding isn’t actually the content that you learn, but the personal dynamics of the board and the board. It could be 8 people, it could be 18 people but it’s a small number of people of often very high caliber people with very strong opinions…how you onboard someone culturally onto the board is a very important thing.  That’s something I’ve seen done poorly and it’s something I’ve seen done well.  We spend so much time and money with recruiters getting the right skills, doing the skills matrix and so forth and then, once the person’s here, that’s kind of when the hard work starts.

What’s the best thing a board can do when a CEO has a major challenge, or the company is in a crisis?

Great question, because in some ways we’ve all been there in the last six or nine months.  I would say that if you have a good CEO and the CEO has a good management team, probably one of the most important things is be supportive of that team, be available, be engaged, but be supportive… if you have a good CEO and there’s a crisis, you hunker down together.

Big Ideas/Thoughts

What was impactful in the path leading to your success as you were growing up

I’m one of the lucky ones to have gotten all the opportunities that I have gotten and to where I am today.  It wasn’t just my mom and my dad that encouraged me because they were new to this country.  they didn’t know how to navigate it.   There were people who went out of their way to help me for really no gain to them.  There were two school teachers in particular, in the public school system that showed me the way and guided me and eventually I ended up at one of these elite public schools where you have to take a test to get in and that launched me on my way to Stanford and my career.  Without these two people, who out of the goodness of their heart just decided to help me, I don’t think I would be here today.  I always try to keep that in mind when I look at where I am and I think all of us are wherever we are, whatever success we’ve had, it’s because other people have helped. I think it’s really critical for us to all give back.

First Board Experience

My first board experience, I would have to say that I really didn’t know anything about boards, so it was very much a learning process for me.  One of the things that I did was just first assume that I didn’t know anything about how boards work and that they had brought me on board for a specific reason. That’s where I focused my time, helping them determine how to sell the company.  Then the other thing that I did was I observed, I watched what the other board members did.  I asked and I learned – there were several really great people on the board who were willing to teach me.

Learning what works for Boards by observing what doesn’t work

I’ve seen a lot of things work.  I’ve also seen a lot of things, not work and that’s really important.  We all talk about how failure is a really important component of education and learning and it really is.

How serving as a CEO has helped him as a board member

It’s tremendously helpful actually.  In some ways, it allows you to relate with a lot more credibility to the CEO. It’s not that other board members who haven’t been a CEO aren’t credible, but in the eyes of the CEO of the company, I think knowing that a board member has been CEO and has been through the pains of being CEO, been in the trenches, has had to navigate the landmines that CEO deals with, it goes again beyond the technical aspects of the role and more to the emotional connection, and understanding that is shared with CEO

Board Composition and offboarding

One of the things that I’ve seen done at multiple companies where I’ve been on the board is the use of a skills matrix and the skills needed to the company changes periodically, the use of the skills matrix has been very helpful.  For example, at iRobot, we do a skills matrix every year and we publish it as part of our SEC filings and it gives the board an opportunity to discuss what we might want to change, in short term, medium term, long term and all the board members are part of that discussion. It’s not just transparent to our board members, but to all of our investors.

Diversity on boards

I see progress, but not enough.  One example is that a few years ago there was a target of getting 20% women on boards.  We’ve met that target, but if you think about it, it’s only 20%, it’s not 50%.

M&A

Most M&As, or a significant number of M&A transactions, ultimately don’t meet the goals or produce the value expected. So where is the disconnect in this if two parties are really trying to do the right thing?

There is a three-letter answer to that and it’s ego, right? So, 75% of all transactions fail to meet their business cases. The good companies, the companies that know how to do M&A well obviously perform much better than that, because they do it for the right reasons.

Transcript

Joe: [00:00:00] Hello and welcome to On Boards: a Deep Look at Driving Business Success. Hi, I’m Joe Ayoub and I’m here with my co-host Raza Shaikh.  On Boards is about boards of directors and advisors and all aspects of board governance.  Twice a month this is the place to learn about one of the most critically important aspects of any company or organization – its board of directors or advisors.

Raza: [00:00:25] Joe and I speak with a wide range of guests and talk about what makes great boards great or makes boards unsuccessful, what it takes to be a valuable member and how to make your board one of the most valuable assets of your company.

Joe: [00:00:42] Our guest today is Mohamad Ali, Chief Executive Officer at International Data Group, the world’s leading technology, media events and research company.  Prior to this role, Mohamad was CEO of Carbonite, a publicly traded data protection and security firm, [00:01:00] where he grew the company’s revenue fourfold to more than a half a billion dollars in four years.

 Raza: [00:01:05] Mohamad has also served as Chief Strategy Officer at Hewlett Packard . In 2018 he was honored as CEO of the year by the Massachusetts Technology Leadership Council and he was named member of the 2018 public Board of the Year by the National Association of Corporate Directors, New England.

Joe: [00:01:26] Welcome Mohamad, it’s terrific to have you today with us as our guest.

Mohamad: [00:01:30] Thank you, Joe. Thank you, Raza.

Raza: [00:01:32] Before we talk about your work as a board member and CEO Mohamad, we wanted to briefly talk about the article in Medium that appeared in 2018 entitled “I’m Living Proof of the American Dream.” Can you talk a little bit about your journey with your family from Guyana to American citizenship, to your successful career?

Mohamad: [00:01:54] Sure. Sure. So that came out of a [00:02:00] speech I gave at the John F. Kennedy Library at a naturalization event for several hundred new citizens and so I thought it was appropriate to talk about the American Dream at such an event, that became the the article that you mentioned.

This was in 2017 and I think it was important to talk about the American Dream then, but the context for the American dream today, I think is different in that over the last few years, I think we’ve seen more and more threats to those pursuing the American Dream. And I think it’s really important for us all to realize that with the exception of the native Americans here, we’re all immigrants and this is a country that is built on immigrants and immigration. And, we’ve really always been [00:03:00] welcoming to immigrants who want to come here and pursue the American Dream. It’s great that you, bring up the article, but, but I feel like the context is different and I want to underscore that

 To your point I did grow up in, I was born in Guyana, which is a little country near Venezuela in South America.  A lot of people don’t know where it is, that’s one to add to your list of things. I moved here when I was 11 and I have to say that, I’m one of the lucky ones to have gotten all the opportunities that I have gotten and to where I am today.

Raza: [00:03:35] Mohamad what were the factors that were impactful in your path to the success that you’ve had?

Mohamad: [00:03:45] Yeah. I would say that there were multiple, but there are two in particular that I’ll underscore. Think my mom who was a school teacher in Guyana, always felt that the path to a better life was education [00:04:00] and my mom really believe this because she grew up very poor.  She was very young, a kid, she worked in the rice fields. She couldn’t afford shoes and she worked very hard to become a school teacher and felt that education was really important. That’s one of the things that now that I’m a CEO and I have means I try to support others to come through the education path. 

The other thing that I feel was important for me is that it wasn’t just my mom and my dad that encouraged me because they were new to this country, they didn’t know how to navigate it.  I would say that there were people who went out of their way to help me for really no gain to them necessarily and there were two school teachers in particular, in the public school system, that sort of showed me the way and guided me and eventually I ended up at one of these elite public schools where you have to take a test to get in and that [00:05:00] sort of launched me on my way to Stanford and my career.  But without these two people, who out of the goodness of their heart just decided to help me, I don’t think I would be here today.  I always try to keep that in mind when I look at where I am and I think all of us are wherever we are, whatever success we’ve had, it’s because other people have helped. I think it’s really critical for us to all give back as a result.

Raza: [00:05:27] What a great story Mohamad. I can also be a testament to that, myself being an immigrant and I know that there have been so many people that have helped me on this journey.

Mohamad: [00:05:39] Yeah. So true.

Joe: [00:05:40] It’s great that you acknowledge the mentors and the importance of mentorship, because I think we all have an opportunity to serve that function at times and it’s just great to keep in mind how incredibly important it can be to the people that you help.

So let’s go back. I’d like to hear about your first board experience. How did it [00:06:00] come about and what did you learn about being a board member from that first experience?

Mohamad: [00:06:05] Sure. Yeah, that’s right. This podcast is about boards, so we should at least talk about them right.

Joe: [00:06:10] We should.

Mohamad: [00:06:11] My first board experience was at a very small company called Ember and Ember was a Silicon company. They made a wireless technology, a chip and the chip a standard called ZigBee. It was used in things like power meters and so forth, things that like where you needed the battery to last years, because you just don’t want to replace them and the bandwidth was low. So this was the perfect application for this new technology called ZigBee.

I think it was in some ways it was quite accidental. At the time I was working at IBM in the semiconductor division and so I had developed sort of a deep knowledge of this space and at the time they were looking and I [00:07:00] done a lot of M&A in semiconductors. So they were looking for someone to join the board to help guide the exit process for this company and so, I was in the right place, at the right time. And, I joined the board and, I would have to say that I really didn’t know anything about boards, so it was very much a learning process for me.

Joe: [00:07:22] Was there an onboarding process where people helped you ?  How did you learn from that first experience?

Mohamad: [00:07:31] A lot of companies have very robust onboarding processes , especially public companies like iRobot and Carmen and so forth but this was a startup, it was a small company.  And I think at the time it was about $30 million, but it was still,a VC backed company and the onboarding process, wasn’t that robust, understandably, but there were really great people on the board.

I think one of the things that I did was just first assume that I didn’t know anything [00:08:00] about how boards work and that they had brought me on board for a specific reason. That’s where I focus my time, helping them determine how to sell the company.  Then the other thing that I did was I observed, I watched what the other board members did. I asked and I learned. I’ve seen cases where first time board member has come on board and try to dominate the conversation, presumptively assume they knew how boards work and those situations are just not good situations. And part of it was maybe I was very young at the time and, it was, like I knew that I didn’t really know anything. So I didn’t, I wasn’t disruptive.  I sat there and I learned, but there were several really great people on the board who were willing to teach me.

Joe: [00:08:44] Yeah, really great point about when you’re first on a board kind of getting a feel for how it’s working and, what the culture of the board is before you dive all the way in. I think that’s important.  Since that experience, what experiences have [00:09:00] had that you think have made you a better board member?

Mohamad: [00:09:04] Now I’ve been on multiple boards. I’ve been on three public boards, several private boards, various size of the companies and when I worked at HP, I spent a lot of time with the HP board.  I would say experience in time. I’ve seen a lot of things work. I’ve also seen a lot of things, not work and that’s really important. We all talk about how failure is a really important component of education and learning and it really is. I would say just being on those boards, I’ve also gotten a chance to get formal board education participating in NACD events and other types of training and learning from other experienced directors.

Joe: [00:09:41] So I’m glad you acknowledged that actually mistakes are a great learning experience. Not everyone will, not everyone does.

Mohamad: [00:09:48] And I’ve made plenty!

Joe: [00:09:52] What are some of the things that you think you’ve learned from the mistakes that you observed over time?

Mohamad: [00:09:57] We talked a little earlier about onboarding [00:10:00] and I’ve seen that onboarding done well and I’ve seen it done poorly.  iRobot, I think the onboarding has really been excellent.  When I joined the board of the bank, the onboarding was excellent.  In some ways it had to be excellent because I didn’t know anything about banking.  They brought me in as sort of the technology guy.  I think I spent many hours and days and weeks being onboarded, but I think one of the most important aspects of onboarding isn’t actually the content that you learn, but the personal dynamics of the board and the board could be, it could be eight people, it could be, 18 people but it’s a small number of people and it’s also a small number of, often, very high caliber people with very strong opinions. Even after the formal onboarding process, I have seen, successful boards appoint a buddy to a new board member to bring them into the culture of the board.

[00:11:00] And oftentimes that’s the chairman or the lead independent director or the head of nom and gov or just someone else who offers to do that, but how you onboard someone culturally onto the board. I think is a very important thing and that’s something I’ve seen done poorly and it’s something I’ve seen done well.

Joe: [00:11:22] Well,  it’s a great point because companies spend a lot of time identifying and recruiting the right people onto their boards and to the extent that they fail to really put them in the best position to succeed by really onboarding them properly, I think it’s a great observation because it’s a waste of time and talent when you don’t do that but it’s not always easy to do.

Mohamad: [00:11:46] It’s very hard to do actually we spent so much time and money, with recruiters getting the right skills, doing the skills matrix and so forth. and then, once the person’s here, that’s kind of when the hard work starts.

[00:12:00] Joe: [00:11:59] Exactly right. You also have had the advantage if you will, of being a CEO of two companies. How has that perspective helped you as a board member?

Mohamad: [00:12:10] It’s tremendously helpful actually. In some ways, it allows you to relate with a lot more credibility to the CEO. It’s not that other board members who haven’t been a CEO aren’t credible but in the eyes of the CEO of the company, I think knowing that a board member has been CEO and has been through the pains of being CEO, been in the trenches, have had to navigate the landmines, that CEO deals with, it goes again beyond the technical aspects of the role and more to the emotional connection, and understanding that is shared with CEO. At least for me, when I’m sitting in that boardroom and I’m asking questions, [00:13:00] I also know that, the next day I’ll be on the other side and how would I, what kinds of questions what I want or how would I want to frame?

I think that helps me in my effectiveness. Having said that there are board members who have never been CEO, they’ve been CFO’s and CIO’s and other roles, and they are tremendously effective as well.

Joe: [00:13:22] Sure there are many paths to it, but I think probably one of the constants over time is that former CEOs successful CEOs can be phenomenal board members for that very reason you’ve stated. 

What’s the best thing a board can do when a CEO has a major challenge, or the company is in a crisis?

Mohamad: [00:13:43] Great question, because in some ways we’ve all been there in the last six or nine months. There’ve been, crises compounded in the last nine months.  I would say that if you have a good CEO and the CEO has a good management team, [00:14:00] probably one of the most important things of working do is be supportive of that team, be available, be engaged, but be supportive. I think if you don’t have a good CEO, then it’s going to be very different and the board may have to take some fairly radical actions, including potentially removing the CEO, maybe that’s something they should have known a long time ago, and this is the trigger you’re doing that.

I’ve been lucky in that I’ve gotten to work with some just tremendous CEOs. Russell at the bank was amazing.  Collin is just a great CEO.  Meg Whitman was a wonderful CEO.  I worked for her, but I supported her in the interactions with the board.

Yeah, I think if you have a good CEO and there’s a crisis, you hunker down together and that CEO at that time, really what they’re looking for is good ideas, good discussion, good engagement, and good support once you agree on what to do.

Raza: [00:14:56] But it’s still kind of in the way of not grabbing the [00:15:00] drivers wheel but fingers-out-nose-in kind of support that the board should provide at that time.

Mohamad: [00:15:09] Yeah, that’s right. I think we all know, the folks listen to this call have experienced being on boards and that our role is not management. We are not running the company,  we’re setting strategy. We ensure governance is there. We hire and fire the CEO and their responsibilities exclude actually running the company. Like I said, if we have a good CEO, you let the CEO run the company and you provide those governance, strategy, oversight type of input and if you don’t have a CEO and the board’s job is to go and get a good CEO.

Joe: [00:15:50] By background, you’re an engineer and I’m curious how much of that has had an impact on the kind of board member you have been.

[00:16:00] Mohamad: [00:16:00] Well, being an engineer has its pros and cons.  I love having been an engineer and unfortunately I try to play engineer well beyond my time horizon here.  I would say that it is helpful in that, when management brings forward a proposal, having some level of technical skills gives you, at least it gives me, a better ability to gauge the feasibility of some of these projects. Having not only been an engineer, but managing engineering teams and managing engineering projects at various levels, it gives me a sense of how to gauge the risk. Ultimately, in some ways the board is about assessing risk and what level of risk to take for what types of initiatives.

In that sense it’s good. What’s not good is when board members try to engineer the products you [00:17:00] see that often board members who used to be, it’s like myself, we have to pull ourselves back.

Joe: [00:17:06] No, I think you don’t have to be an engineer to a now and then realize you’re getting too far into the weeds, but on the risk side, it’s such an incredibly important aspect of what a board does assessing risk and determining how much risk the company should be taking. So, it sounds like that it’s more of a strength than anything else.

Mohamad: [00:17:26] I think it’s a strength, not everyone does.

Joe: [00:17:30] So one of the things that Raza and I have had many conversations about is offboarding, which seems to be one of the most challenging things for every board.  Even the best boards, even the best leaders. And I remember you sharing your experience with one company about how you did the off-boarding and I’d really be great if you would share that again with us because I thought it was really just a great approach.

Mohamad: [00:17:56] One of the things that I’ve seen done at multiple [00:18:00] companies I’ve been on boards at is the use of a skills matrix and the skills needed to the company changes periodically. When the company is smaller and younger it may need more visionaries or more technical skills or more something and as it gets larger and it becomes public it needs people with governance skills, it needs people with a public company experience and needs people with understanding of the SEC, of organizations like ISS and Glass Lewis. There’s a different set of skill as it becomes a global organization it needs people who have global experience.

Even for a large company, like an HP or a company of that size, these companies are changing as well and technology and the world’s changing around us. The use of the skills matrix is actually been very helpful because, for example, at iRobot, we do a skills [00:19:00] matrix every year and we publish it as part of our SEC filings and it gives the board an opportunity to discuss what we might want to change, in short term, medium term, long term and all the board members are part of that discussion.  I’ve found that has been one of the most constructive ways to do it and if you look at the iRobot board, we have actually had some very successful transitions over the years.

Joe: [00:19:26] I think it’s a phenomenal strategy.  I particularly like the fact that you do it every year, companies refresh their strategic plans every year. Why shouldn’t a board do the same thing because that in effect is what you’re doing. So I think that’s great. Thanks for sharing that.

Raza: [00:19:43] And publicly then filing it with your SEC filing. So it’s a bigger level of transparency.

Mohamad: [00:19:49] Exactly. it’s out there. It’s transparent. It’s not just transparent to our board members, but to all of our investors.

Raza: [00:19:55] Mohamad, in the current climate how do you see the progress in [00:20:00] increasing diversity, equity and inclusion at all levels of business, but in particular for company boards, how has that been coming along?

 Mohamad: [00:20:08] Yeah, no, that’s a great question and yeah, of course, very timely. so I mean, I. I see progress. but not enough. And, one example is that, a few years ago there was a target of getting 20% women on boards. And, we’ve met that target, but if you think about it, it’s only 20%. It’s not 50%.

With the recent heightened recognition of racial injustice we’ve seen boards move more aggressively to bring on blacks and Latinex onto their boards, but again, its highly underrepresented. I do see a positive trend, but you know I think we have a long way to go with respect to getting, true diversity on boards.

Raza: [00:20:55] We’ve been told like the pipeline is the problem, is that real or [00:21:00] yeah. Is that an acceptable excuse anymore?

Mohamad: [00:21:03] No, I don’t think it’s an acceptable excuse. I would say even maybe a couple of years ago, people felt it was a perfectly acceptable excuse that, hey, they’re just not enough diverse board members out there. There aren’t enough black men and women who can serve on boards and not just boards, like in any role and I think, people are coming to the recognition that, that there are qualified people out there. We just have to try harder to find them. And in some ways you hire who you know and for many people who don’t come from a diverse background, they don’t know a lot of people who aren’t diverse.

You come to this conclusion that there must not be out there. I’m on the board of Oxfam, which is a large charity and, I led the search process for the new CEO. The prior CEO retired after 20 years. [00:22:00] We hired Russell Reynolds. They did a really great job.

We made it pretty clear upfront that we wanted a diverse slate including women, blacks, Latinex, et cetera. and we got that. We were very lucky in that we had over 200 candidates. It was just incredible and we were able to hire a woman, who was the number two at CARE and we have to relocate her from Zurich to Boston, but we did that and she has just been tremendous.  I think the talent is out there and if you look at what she’s done within her own management team now, she’s a very diverse management team that includes, blacks, Latinex, Asian, a very healthy, gender diversity. So it was revealed was not only possible, but she got it done. So I think that excuse is now an old excuse.

Joe: [00:22:50] Do you think some of the momentum towards diversity is a recognition that it actually is financially [00:23:00] driven as well. In other words, it’s the right thing to do, but it feels like companies are starting to recognize that it is in their financial interest to do it as well.

Mohamad: [00:23:09] Yeah, it is in their financial interests and there’s this really great McKinsey study that correlates, diversity with EBITDA which is kind of interesting, only McKinsey would do that, but, and I believe it, and in the past I have used that as an argument for a more diverse workforce, more diverse board, et cetera.  But I have to say there are a lot of people who, don’t that is not necessarily a sufficient argument. I believe it. I think the facts speak for themselves, but I think you need multiplicity of, arguments and facts to get to diversity. I think the financial benefits are certainly one, but I think, a lot of executives I know are now starting to recognize that there is an ethical and moral aspect of this as [00:24:00] well and then I think the third piece of it is dispelling this myth that the talent doesn’t exist out there. And I think those three things, as they come into positive view here, does create an opportunity for us to increase diversity.

Raza: [00:24:16] Mohamad, you now lead a great technology company and technology seems to have experienced tremendous growth even in the pandemic or despite the pandemic. What should we expect where is technology headed? Is this boom kind of a bubble or technology’s there to stay for long. What do you see?

Mohamad: [00:24:39] Yeah. So your question about a bubble, oftentimes when we talk about a bubble of they’re talking about the stock market or the financial markets. I can’t really comment as to whether these tech stocks are over valued or not, but what I can tell you is that I don’t think this is a blip on the radar screen.

I think technology is here to stay.  I think [00:25:00] that, technology has been driving humanity for millennia, from the invention of steel, the locomotive, the telephone,to the internet. If anything that’s different is that the rate of change has just has increased dramatically and will continue to increase.

We’re obviously seeing technology and technology companies, but we’re also seeing, non technology companies become technology companies.  At IDG we have multiple businesses, we have the IDC business that’s really sort of a data and technology business, but we also have a media business, we have an events business, we have a demand generation SaaS platform, which is clearly a technology business, but that media business, there was a time when it was  on paper and today it’s all digital. and there’s a very sophisticated, backend that powers, our publications, like CIO magazine across the globe and, hundreds of countries and that has become a technology company. A lot of traditional industries are becoming technology companies. [00:26:00] I think it’s here to stay.

Raza: [00:26:01] I think, it was 2005 when the “software eats the world” article came out and I would bet, McDonald’s today and FedEx today is a technology and software company, ultimately. So I think that’s where it’s headed.

Joe: [00:26:18] Great point.

Raza: [00:26:20] Mohamad, you’ve been involved in the M&A world on many sides, and have seen a lot of transactions. What in your view is the board’s role in M&A for the enterprise? What should the board of the acquiring company be looking for? And if you switch the side, what should the board of the company being acquired be looking for?

Mohamad: [00:26:40] Yeah. So, the board has a big role in M&A, it is some of the largest strategic decisions that a company will make and the board has to be involved. And so, in the  companies that I’ve been involved in, either a CEO or as an independent board member, this [00:27:00] has always been a key element, 

For the company that you’re acquiring, if you are the acquirer, obviously you want to get, you want to acquire a company that is going to support the strategy that exists.  And then you also want to make sure that not only does it support the strategy, but it translates into financial benefits. I would say that it’s not very complicated, but the actual process and act of working with management to evaluate the M&A target, can be complicated. And then on the flip side, if you’re selling your company, you want your employees to go to a good home, but you also want to, maximize your value. And especially if you’re a public company you have a fiduciary responsibility to maximize the value in the sale. So yeah, I would say that, boards have an incredibly important role in M&A.  

Raza: [00:27:57] In this context, people also hear [00:28:00] that most M&As or a significant number of M&A transactions, ultimately don’t meet the goals or produce the value. So where is the disconnect in this if two parties are really trying to do the right thing,

Mohamad: [00:28:17] Yeah. There is a three – letter answer to that and it’s ego, right? So, 75% of all transactions fail to meet their business cases. So you say, why would why would you spend any money on an M and a, The good companies, the companies that know how to do M&A well obviously perform much better than that. And so I think it’s a, when I was at IBM, we used to, I used to have this philosophy that if a business was performing well, then, we would be more likely to do M&A, because they had a good leadership, [00:29:00] good business acumen, et cetera. And if a business wasn’t doing well, we weren’t going to try to fix it with M&A because we were going to create more of a mess and you see a lot of that, where businesses aren’t doing well and the CEO or the board think that, Oh, well, we’ll just acquire this company and all it’s going to be better. And there’s a lot of failure there. Right.

So, I think that  for successful M&A there’s a set of characteristics. If you have a successful business, you have good management team. I think that’s one, but then the other is, having the culture, the knowledge, the experience, do you know what I call sort of systematic M&A. You know, you’re constantly doing it. It’s part of what you do. you’ve learned over the years how to do it well. And, and unfortunately, there are a lot of companies where, it doesn’t succeed, but, yeah, M&A’s a really important tool in a company. It just needs to be done right.

Joe: [00:29:56] Are there particular skills and experiences, [00:30:00] in the board members that are especially helpful in an M & A

Mohamad: [00:30:06] situation?

Yes, board members who have been through a meaningful number of M&A transactions in their prior roles, can be very helpful. I think CFOs can be very helpful because oftentimes they’ve seen a lot of M&A, and they bring reality to you, to what’s sometimes called strategic benefits that you put can’t quantify, right.  So they make sure you’re able to quantify them.

So yeah, I mean, I think, prior experience with the M &A financial lens, or both, I think this is one where, especially for a technology company, The being an engineer, a piece of it comes back because you have to, oftentimes you have to assess the risk of acquiring other technologies. And, I have been involved in a lot of technology acquisitions now and, there are some where everything looked good [00:31:00] except, the, the technology you’re acquiring was just not scalable and you just ran out of steam and it would have been good to know that ahead of time. Right. Or at least have the board ask those types of questions ahead of that.

Joe: [00:31:12] Great.

 Mohamad. It’s been great speaking with you. Thanks for joining us today. I hope you and your family are well and staying safe.

Mohamad: [00:31:20] Joe, Raza, thank you so much for having me on the show.

Joe: [00:31:24] Thank you all for listening today. To onboards with our special guests, Mohamad Ali. Please stay safe and take care of yourselves,your families and your communities as best you can. Raza you take care. I hope you and your family also continues to be well.

Raza: [00:31:41] Yes Joe, we’re all where we’re all staying safe. Thank you, and I hope, the same for you and your family.

Joe: [00:31:46] Thanks. Take care.

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