[00:00:00] Speaker A: So many times people limit their ideas of synergies to cost reduction. It's not always about getting the cost out. It's where can we maximize the intellectual capital of both organizations to drive change?
[00:00:15] Speaker B: Welcome to the next Imperative, a podcast hosted by A and M energy leaders tackling key issues and trends in the industry.
[00:00:24] Speaker C: Hello, and welcome back to the next Imperative.
My name is Jeff Angulo. I'm your host and moderator. Joining me for today's conversation are my Alvarez and Marsal colleagues, Wade Stubblefield, Andrew Burns, and Jacques Duplantis. Gentlemen, welcome.
[00:00:40] Speaker B: Thank you.
[00:00:41] Speaker A: Thanks, Jeff.
[00:00:41] Speaker D: Thanks.
[00:00:42] Speaker C: This episode is a continuation on our series of energy industry M and a transactions. And today specifically, we're going to talk about the period between when a deal is signed and announced and when it actually closes and ownership changes hands.
What we really want to dive into here is integration planning. What are the key aspects of it, why it's so important, and why it really can make or break the success of a transaction. Wade, why don't we start with you? Can you share your thoughts on why pre close planning is so important to make a transaction successful?
[00:01:11] Speaker A: Yeah, absolutely. Thanks, Jeff.
I think it comes down to really two things in my mind. First, communication. Right.
You know, a lot of times clients will think, okay, we can't do anything, we can't engage until we've closed the transaction. When in reality, as soon as you close, right. There's a whole lot coming at you very quickly. Vendors want to know how they're going to be treated. Right. Other stakeholders need to know how they're going to be treated. Most importantly, your employees, as we've talked about in prior episodes, from the day the deal is announced until the day you tell them what's going to happen to them. Right. And what role they have in the new organization, the anxiety just builds and it continues to build. And when employees get anxious, they start looking, and that's never a good thing. So communication, communicating with, again, all your stakeholders through the process. The second thing that's very critical to being ready is what has to happen on the literal day one post close. Right. And what, what changes are going to happen in processes or procedures? How are you going to consolidate two sets of books and records when you're not on one system during some period of transition? Depending on when a transaction closes, you may have a very short window to have that worked out, especially if you're a public company, to be able to combine those financial results for the period post close, getting consultants or advisors teed up around purchase accounting and doing all the valuation work, either internally or again with third parties to set your opening balance sheet post transaction. Those take time to get built. And again, if you're a public company or you have debt reporting requirements, that may come very closely after close a period close, you want to build in time to have a lot of that legwork done in advance.
[00:03:06] Speaker C: What can you add?
[00:03:07] Speaker D: I think the one thing I'd add to that is, and Wade touched on this, right?
Everybody wants to know what's going to happen, right? It's people, it's customers, it's vendors, other interested stakeholders and parties. But the one big thing there is to realize that, as Wade mentioned, people just think, oh, I can't communicate until we close. Well, the other thing to think about, this isn't a two step process. Hey, it's pre closing and post closing. One of the things you have to think about when you're thinking about the impacts to all those people is what's the transient state? So a lot of times, you know, close does not happen. It's not a magical, okay, now we're one big company.
It may take a period of time, it may take three to six months, sometimes twelve to 18 months in bigger deals to get all that integrated. And a lot of times you've got to think about what those processes look like in the interim. Sometimes interim staffing needs, and you may have people that don't stay on long term with the combined company, but you're going to need them in the interim to help you get through that transition, that integration process.
[00:04:06] Speaker B: Andrew, the other thing I'll add to why planning is so important is you are truly shaping a new organization. And so everything you do in planning defines what is the combined organization going to look like? How are we going to function? Who's going to make decisions? All of that needs to be thought through and articulated during the planning process. It may not be finalized, but when you think about planning, it is, what is the tone that we want to set? How is this combined organization going to work for everybody that's involved?
[00:04:34] Speaker C: Andrew, what are the typical integration planning objectives?
[00:04:38] Speaker B: Yeah. First and foremost, it is making sure that both companies continue to run seamlessly with minimal disruption to operations and that operations happen safely, largely on day one. The guidance is nothing really changes. Keep doing what you do. Do it safely and do it efficiently.
The second is around supporting employees through the transition. As we can all imagine, if we got noticed that our company was being acquired and our job was changing, we might be a little worried. And there is a lot that goes into shepherding employees through this process. It goes down to the individual employee level, getting to know folks, what they do, how long they've been with the organization, asking them questions, and taking an interest in each employee. Important in understanding not only how each individual works, but how the combined company culture works.
The other thing about planning is it allows you to really focus on understanding where the two companies work differently. That's where we spend a lot of our time and effort is digesting how company a does things versus company b, and what is it going to look like when they come together. So really understanding the intricacies behind how each company operates, how they handle decision making, who does what, and where it falls in the organization. Organization, those are all things that you want to get a strong sense for during integration, planning, and then, like we've said, just ensuring that we're ready for a smooth day one. Oftentimes we stand up a day one readiness team. We have recurring meetings to really manage to day one and making sure that it goes smoothly, and so making sure that everybody's eyes are on the target at the end of planning, which is to get to day one smoothly. And then last but not least, it's getting your arms around synergies. You may not have the full picture because you don't have all of the data during the planning process, but it's starting to generate ideas. Having working sessions around where are we going to get the dollars? Where are they going to come from? Is it GNA? Is it Opex? Is it capex? It's probably all three with varying amounts from each bucket. But it's having those conversations and starting to articulate where those dollars are going to come from.
[00:06:45] Speaker C: Sometimes that's a really important part. Where a third party advisor can help, where we can establish a. A clean room.
[00:06:50] Speaker B: That's right.
[00:06:51] Speaker C: Where we can see data, or certain parts of our team can see data for both companies, not share it, obviously, with each company and maintain that confidentiality, but also get a head start on where this energy is going to come and where the work needs to focus once the transaction closes.
[00:07:04] Speaker B: That's right. And where we play a large role in that is making sure that what is being shared is not confidential. It's not proprietary, but you can look at a lot of information during the planning process. As long as it's been cleansed, there's not too much level of detail there, and it can start to give you a sense for how the other company works, what the data looks like, and where you take it from there.
[00:07:24] Speaker A: Andrew, I think that's a great point. And especially as we've all seen as these deals, the industry, especially the upstream oil and gas industry, has gotten very disciplined about identifying, at least preliminarily, synergies before deals are announced. But a lot of times those are still a very high level balance sheet. Comparability, p and l comparability at a very high level between, between the parties. It's not till you get into that granularity that you can really start shaping, right? What that where the go get is going to be in each of those cases. And then, as we all know, time. Time is money, right? And if we don't start executing around the plans to capture the synergies immediately upon closing, then time gets away from us and companies get busy on other things or they lose focus on capturing what they promised to the street or to investors or to other stakeholders that would come out of that. So setting forth very early on in this process through a clean room, through whatever mechanisms you need to, to share that enough detail to really build out that full scope of synergy capture is critical.
[00:08:31] Speaker D: Yeah, and I'd probably add, you know, since you mentioned upstream, it made me think, too, on the oil field services side, and we think about clean rooms and synergies. A lot of times there's cost synergies. When you start talking about services and people that manufacture and sell components, there's a top line synergy of that, too. If you start thinking about oilfield service companies and how they may get a bigger piece of the well lifecycle, you've got to spell that out. The sooner you can do that, the better. So back to the clean room. That's a place where we play a lot as we go in and look at what pieces do you have, what pieces does the counterparty have, how do we put that together? In some cases, very early on we need to identify that, because in some cases, you may not take all those pieces. You may say there's certain pieces that just don't fit well in the combined company and we sort of set them to the side because those are going to be future divestiture candidates or they're just not a big focus. And once again, that has impact on the stakeholders, the people, the things we've already spoken about.
[00:09:25] Speaker A: Jacques, that's a great point because so many times people limit their ideas of synergies to cost reduction, right. What cost are we going to take out versus how can we work better as an organization? Get more from the top line, right. Get better, well, production by bringing two great companies together who might do things a little bit differently in, well, design or completion design or things like that. So it's not always about getting the cost out. It's where can we maximize the intellectual capital of both organizations to drive change?
[00:09:58] Speaker C: Jacques, where can problems occur in the pre closed planning phase?
[00:10:02] Speaker D: I think the biggest thing people have to recognize is it's not a one size fits all process.
When you do transactions of this nature, we see it a lot. We have clients that, hey, you guys worked on this deal over here. What was the playbook for that? We just need that playbook.
Every one of these transactions is unique. It has different pieces. So I think you've got to recognize that up front. The second thing is, and we've touched on this, you've got to get a structure in place up front, even pre close. Right. When you're doing your diligence and planning, who are the people involved? Who's under the tent? How do we manage that? There's a lot of communication that has to take place, but it has to be very structured. You don't want to start off on a point where you're getting off on the wrong foot because you're asking questions in an unstructured way. The counterparty says, hey, these guys don't seem to have their stuff together, and we're going to be joining their company. Right. There's things like that. You want to get those in place. I think beyond that, it's getting into the risks. So you want to understand what risk you're dealing with. Back to the one size fits all approach.
You can't just take a checklist and say, hey, let me check off these things. Every company, every target is going to have its unique nuances. So you've got to bring somebody in that knows the different pieces, whether it's in the back office, it's in the front office of operations.
You've got to have somebody that knows those things. If you're just doing a checklist or even if you do it internally and you say, well, hey, you know, so and so has never done this before, but they're really good. We like them. They're high potential. If they've never done that before and they don't know what to look for, that can really bite you in the end. And I think beyond that, it's really understanding, functionally, the interdependency. So not just in the functional silos, who's doing what, who's looking at what, but how do those things interconnect? Right. You know, as an upstream example, I look at Wade, because Wade does a lot of this.
I may be looking at things on the operations and production side of an upstream company, but wage relation, how we're getting the measurement and the production figures in, because there's a regulatory reporting component, there's a component of just the whole revenue process and disbursing with jib and royalties and things of that nature. So people have to understand those things and how they fit together. And once again, not just the risks in the silo, but where the risks are from the standpoint.
[00:12:13] Speaker A: I'll add, and I'll go back to Andrew's point you made early on, is that the number one objective is to keep operating the assets safely and efficiently and meeting reporting obligations and all those. The teams have day jobs.
The company employees have things they have to do that aren't changing just because they're entering into this merger. And so one big challenge, or transaction, one big challenge is being able to deploy the right resources with the right industry experience, right, to identify the risks and to plan for post close activities efficiently. And that's largely where we get brought in.
[00:12:54] Speaker D: Right.
[00:12:55] Speaker A: And that's the true singular value add that I think we bring in every transaction is we have that industry knowledge. We know what's required in the field, we know what's required throughout operations. We know what's required in the back office to help be those subject matter experts and that thought driver and question asker in planning sessions and in workshops to really flesh out what it's going to take to put these two assets, two companies, together.
[00:13:25] Speaker B: Andrew, the last thing I'll add here is oftentimes during the planning process, companies think they can't communicate with each other. I know that was mentioned earlier, but I want to double down on that because that is an easy way for planning to go awry.
When companies are not communicating, you start to lose employees. When you lose employees or their minds wander elsewhere, it's very easy for the integration planning efforts to get off track. It's very easy to draw skeptics. It's very easy to have people withdraw from the process and the inputs to the process become very poor. And so making sure that if you can't formally communicate with folks, that you're finding those ways. Whether it's having someone attend an existing meeting to give a little update on how the planning effort is progressing. It doesn't have to be overly formal, but there are things you can do to get in front of employees to start to answer questions, maybe not to the full extent that you'd like to, but start to answer questions and engage with folks to let them know, hey, we hear you. We know you have concerns, and we care about you and how you're doing through this process.
[00:14:24] Speaker C: Jacques, what are the key steps in pre integration planning?
[00:14:27] Speaker D: Well, I think one of the biggest ones is, as I said a second ago, is it's the structure. What's the structure you're gonna use to run the process?
Who's in charge of what pieces, who's gonna be communicating with whom on what pieces, who's coordinating all those activities between the different functional silos of the organization? And then what's the governance structure that says, if there's any kind of an impasse or a disagreement, where does that go to to get resolved? Right. Is that sort of an executive leadership team type decision? So I think that's a big one. The other thing is, and there's a number of these, but the next thing I would say is what's sort of your guiding North Star principles. Right. The reality is we talk a lot about this when we're working with our clients, is integration is more of about. It's about the integration. It's not necessarily about optimization. Yes, there's things we have to do upfront. Yes, we have to set the operating model and look at the synergies and decide how we're going to get those. And we want to take advantage of those. Quick wins out the gate, but you're not going to be able to do everything. So once again, that North Star principle becomes important to say, what do we have to focus on? What will we not pass up at this stage, versus what are the things we're willing to say? We'll deal with those later. I think once you get beyond that, it's really getting into your diligence and planning. So we talk about risks, getting the right people, understanding those risks, understanding how the pieces of the business are going to fit together in conjunction with that. What's your operating model? Because that's a big portion of your synergies. And as we discussed earlier, that operating model will allow you to be in a place to communicate when the deal gets announced, if you've already predetermined what that looks like to communicate what's going to happen to people who has a job, who may not have a job. Or at a minimum, if you don't know all the details, you can at least give them some semblance of this is where we plan to go. We don't know all the details. And that gives people confidence versus leaving them to wonder what's going to happen to Andrew's point. Right. Their minds wandered. You lose your best people first, and then I think once you get that done, it's really saying, you know, does that all fit with the way we benchmark this underlying the underpinnings of the, I'll call it the economics or the synergies case, the thesis for the deal. And then beyond that, it's how do you communicate and execute? That's if you line those pieces out, you'll be in really good shape to have a successful integration, in our opinion.
[00:16:45] Speaker A: Yeah. And how we, how we do a lot of that and get our, get our arms around it is we'll set working sessions with constituents from both organizations, and we'll go function by function, kind of major work stream by major work stream, not to get desk procedures or field operating manuals, but to get those big rocks.
How do they conduct their business?
How do they do what they do in their systems and processes? Understanding that, in large part, the companies that we're putting together look very similar, right. They may operate in different basins, they may sell different products, but for the most part, they're in similar verticals. Right, in operation. But there's nuances in how they operate. And a lot of times people think, well, this is a data migration, right? We just got to take the data from their system and put it in our system. And when in reality, there's a lot of work, as we all know, is automated, and as much AI and technology is out there, we know there's a lot of work that happens outside the system, right. Getting our arms around that, because the IT and the data integration side of the house won't have visibility into that. So we want to capture that, right? So across the organization and having both sides at the table, being able to ask questions, be collaborative through that process, is critical. It also helps to start building relationships between the teams, right. Because no matter what, very seldom, very seldom do we have an acquisition or an integra or m and a close, and there's not some transition period of some length. So there needs to be working relations across those functional teams from day one, just again, to make sure that the new combined asset keeps working safely and effectively and efficiently.
[00:18:33] Speaker D: So, Wade, the one thing I'd add to that, too, is, I think, in the specifics of how we do that, right, how all the pieces fit together, it's not transactional. You can't just take AI or data and slam it into a system. You know, one of the things, and a lot of our deals, or really all of our deals that we look at is, I always say, what does company a do and what does Company B do and what are the differences? What needs to change back to the North Star principle? What do we know? We're going to do it a certain way out the gate versus we need to look at those things and say, hey, we should do it this way, or there's an exception, or, hey, there's something we didn't think of back to risk where, you know, a closing process, hey, you close in seven days, you close in ten days. But hey, we've got a seven day reporting requirement in new company as an example. So that's one of the big things you have to look at. And you've got to have the people that know how to look at that, ask those questions and really size up every one of those individual operating processes across the business if you're going to be successful.
[00:19:24] Speaker C: Wade, what's the importance of having the integration management office integrated across the entire client team?
[00:19:29] Speaker A: Yeah, it's critical. This is an integration of a business. And again, whether it's a singular asset or product suite or whatever, or it's a true m and a corporate merger, merger, it's a business. It's not just an operations. It's not just an accounting. It's not just an IT exercise. There's, there's dependencies that cross over.
You know, at the end of the day, accounting finance is, is the reporter of the news in a lot of cases, in most cases, every case.
But the data and the information they get come upstream of their operations. And so having everyone around the table, everyone understanding what's critical and prioritization for their group and for other groups and how they fit into that from a priority perspective is critical. And what we find often is that companies will use this exercise to better define their processes. To say, yes, this may be a tuck in. We may be just taking this asset and tucking it into our existing operations. But you know what? We don't have a lot of. We don't have good communication across our organization right now. We've got handoff issues. Right? Let's use this opportunity not to optimize, not to take our eye off the ball of getting this thing put together on time and on budget, to start realizing synergies in every other aspect. But let's capture those areas where we know we think we may have difficulties. Let's parking lot them, and let's come back in an optimization phase post close to really make this new organization or our existing organization that's just gotten bigger, more efficient, more effective.
[00:21:12] Speaker C: Andrew, what role do change management and change plans have in pre integration planning to make it successful?
[00:21:18] Speaker B: When you think about a transaction in and of itself, it's a huge change event. And just because you can't integrate right away doesn't mean you can't start planning for the change. And so it is really essential to everything that happens during the planning process. Having people that are on point to listen to the changes that are being identified and to start to document what those changes are and how we're going to go about addressing those, you have to have that in place from day one. In addition, with all of the changes that are being identified, all of the differences that are being worked through, you need to be thinking about communications. So we may not be able to communicate everything we want right away, but what is our communication going to look like on day one? There is a lot of thought and diligence that goes into putting on a really strong, call it day one or even week or month one post close. And all of that communication and change effort starts from the very get go, the announcement. So having that in place from the start of the announcement is critical to success.
[00:22:22] Speaker A: Andrew, I think to accentuate your point, and if you had visuals that went with these podcasts, Jeff, we could flash up our standard kind of standard, although every deal is different, kind of how we structure these exercises, they're clearly, as we've talked about, functional focus, but at the top, aligned with integration lead is always this communication lead. Right.
It is overarching the entire integration team. It covers every aspect of what's going on, not just, not just within the transaction itself, but also, you know, what's going to change post close. Right. What, what are, what is our cadence going to be for communicating employees throughout the process? So it is, it is a singular role within how we bring teams to bear because it is so important.
[00:23:17] Speaker D: Yeah, and I'd add to that, Wade, I think back to risk, and you can't do everything at once that that some deals back to sizing up the risk and what you need some deals, it's not just the communication, but culturally. Right. How far apart are the two cultures that you're bringing together? Because in some cases where they're similar, that may be easier to deal with. Your communications are more transactional in nature. Here's what's going to happen. Here's what's next. Whereas if you get cultures that are further apart, that is more change in itself, and that requires a higher level of touch. So that's something that has to be looked at once again as part of that plan to say, how much effort will it take to communicate? How much effort are we going to have to touch? Some of that will drive some of your risks, too, with just employee retention and things like that. So all key aspects to consider as part of change management.
[00:24:03] Speaker A: Yeah, a great example of that.
We're seeing it a lot now post Covid, obviously, is, you know, remote work versus in office work.
People might think, like the oil and gas industry, the culture is always the same. No culture is toned from the top, right? Culture is, you know, how delegated operations are, how much decision making is retained in a leadership role versus delegated down. But it's also the ways of working. And one we come across in every transaction right now is undoubtedly one party. One company will have one work from home or remote work aspect, and the other one will have something completely different. And so understanding how that's going to work and there's going to be change. There's going to be change for somebody through that process. That's just one example of a cultural aspect that we're seeing every day right now.
[00:24:56] Speaker C: Jacques, what are the potential risks of not developing a pre closed plan for how the integration is going to come together?
[00:25:02] Speaker D: There's a lot there. So there's a lot, or I keep talking about risks, but I think, look, some of the biggest ones are going to be synergies, right? So once again, what is the thesis of this transaction? It's easy for somebody to sit before a transaction is done and on paper and say, well, here's where we think all the math works out to those synergies, but it's how you execute to get to those. And if you don't have a plan to execute, you start making snap decisions in the field, you're probably going to miss some of those synergies. Right. It's once you're on the battlefield, you don't have time to plan. You got to have that plan going into the battlefield.
I think the other thing is increased cost on transactions. So once again, if you don't have a good plan and that integration takes longer than it should, you're going to have additional advisor fees, which nobody wants. At least that's been my experience.
Transition service agreement. So if you're doing a transaction where we do a lot of private equity backed deals, if it's a private equity backed deal where we're essentially carving something out and standing up as a new company, you're going to have a transition service agreement, you're dependent upon the previous party to provide services. If you're buying assets from a large company, I mean, it's common a lot in the E and P world or even in oilfield services, we're going to need a transition service to do that. Well, we may have to stand up new systems or just large wholesale changes if we don't have a good plan to do that. That transition service agreement comes at a cost, and most of them either have a hard stop because the seller, they want to be done with you at some point, or they may have an option to escalate. But that escalation comes at an increased cost, and it can be painful. So you want to get out of that TSA as quickly as possible. I'd say even if you can. You know, we've talked about this in other episodes, best practices. When you structure those TSA, you structure them the way that you can turn off certain services at certain times, which lets you optimize the cost.
I think beyond that, we've talked about people, right. If you don't communicate, you will lose people. And the reality is you lose some of your best people first. Right. They're the most attractive. There are people out there. We've seen it time and time again.
A deal comes out in the news. There's companies going, hey, we think we can go. This is an opportunity for us to go poach people out of one of the two companies. And you see that happen.
I think one of the bigger things, more operationally focused, and I've seen this a lot in e and P and oil field services is, I'll call it operational risks. So regulatory risk, what is your plan? Do you know what you need to do regulatorily with a change of control, whether that's operating permits, filing plans, filing a new operatorship license, that needs to be addressed.
If you've got oilfield service, manufacturing or services, Wade talked about, what's the impact of customers? What are the things that have to happen there? How do we reorganize a sales organization? How do we reorganize or consolidate manufacturing? Those can have big cost implications if you don't do that right, or working capital implications. When you talk about manufacturing in upstream, one of the things we see time and time again when we're doing diligence, are there things where you have to go in and, and PNA wells out the gate. I mean, I've had deals I've worked on where the first time we got out to the field and they would show us wells. I mean, I had one, they showed us a well that was an older well, vertical well that was in the middle of a playground. Needless to say, that was being p and a'd on day one or plug in a bandit on day one. So there's things like that you've got to look at, right? What are those risks? Because you can say, well, hey, the business is running just fine, but the previous operator of that business may have not had the risk profile you have.
I had a client once, and everybody would go on name. They had a pressure control incident on a rig. They had another rig where they had a blowout. And somebody said, well, that's just part of doing business. And we said, that's fine when you're a small operator, but when you're part of a much bigger company with a bigger profile, that's not the way we do things. That has a lot of just inherent issues, risk, liability, not to mention just the risk to people, which is probably paramount. There is paramount. So I think there's that. And then lastly, I'll say, just the way you touched on this, it's suppliers and customers, right. Not creating confusion for them. I'm doing a deal right now, and that's one of the big things we're trying to figure out is with our customers that we don't have the sales organization stepping on top of each other, oil field services related. So that's the other one.
So I don't know, Wade, if you.
[00:29:23] Speaker A: Want to add to that.
Don't have much to add there. I think the one hesitancy for people to get started is the lack, potential lack of certainty, I will say, especially in today's FTC land, right, where transactions may not close that before we never even thought about not closing. So some organizations may just not want to make the investment upfront for something that may or may not happen. And I just caution them at whatever level, whether you do it solely internally with the resources you have, or at least put the groundwork and the structure in place so that you can get moving as quickly as possible. Once you have that certainty again, it's money well spent, especially when you look at the size of the transactions we get called in to support.
[00:30:13] Speaker C: Andrew, can you share some real world examples of where a and M has helped clients with the pre closed planning?
[00:30:20] Speaker B: Yeah, I think between the three of us, we've done probably over 5100 transactions, maybe, but happy to share a recent example, Wade and I actually worked on this one together, and this was a permian operator acquiring another permian operator. On the surface, a very simple transaction, very simple planning effort. But this transaction in particular had all kinds of complexities.
One pretty large organization, another very small organization, and people asking a lot of questions and looking for things to do. And when we. Everything we've talked about in this episode around planning is all about bringing rigor and structure. And that's where usually we play a large role, is standing up that integration management office and getting the team on a cadence to operate successfully and get through the planning process and get to day one cleanly. We had a team of people, roughly ten individuals, spread across each of the different areas of the business. So, IMO, change operations and back office. And collectively we went through an eight week planning effort, went through the entire talent selection process, blueprinting process. We really covered everything in a short eight week timeframe and had a very successful day one.
[00:31:38] Speaker D: Yeah, I mean, I'll throw an example out there. I always think this is an interesting one we did. It was several years back. It was also an upstream deal, and this was a carve out. It was private equity backed. There was no management team in place.
The fund had actually done the transaction, and A and M our group was acting as interim management and back to. You can have the best laid plans. But I mentioned earlier, when you get on the battlefield, things pop up.
In this particular case, the organization that was selling us assets in a basin, once again, there wasn't a free flowing information pre close, and we had some conversations, but they were always supervised, if I'll call it that. And once we got close to closing, it became known to us that there was prime acreage in that basin that we were going to lose if we did not drill it. There was no drilling campaign at the time in place for these assets that we were purchasing, nor did anybody contemplate back to the operating model. We needed a drilling organization.
Myself and one of my counterparts, we were co leading the overall integration. I was also overseeing operations. We literally had to go in within a matter of two weeks, get a couple junior geologists from the target who were coming over in the transaction and say, show us your plans. Then we had to build a drilling plan around that, go select rigs, and then when the CEO came in, I think on day two, present that to him and say, this is the package you're taking to the board for an additional funding to run a multi rig program over the next 18 months.
But once again, it goes back to, we talk about planning, but sometimes the planning is not there. You've got to make sure you have the right people in place when those issues come up that you can quickly address them. And this is one had we not been able to address, would have had major impacts for that transaction. Just given the value of the wells and the offsets we could see with the other operators and how prolific this area was that we could have lost out on.
[00:33:36] Speaker C: And Wade, I know you and I recently worked on one where very early in the pre closed planning process, we got the teams together from the two companies for social events before we did any real work to get to build that trust and that camaraderie and to start that journey. And I think it worked out really well.
[00:33:54] Speaker A: It did, and I encourage that. And it's kind of in our playbook now that when we come to companies and we start down this path with them, again, it's about the relationships. And some of those employees are going to become your employees.
But regardless, there will be a period of time that first you need them to share with you openly how they do things and where their business is different than yours. But then post close, there is a period of time where you're one team. They may be transitionary employees, but you've got to work together. And so, like with every organization having non work focused time to get to know the other people on the other side of the table, it helped us learn both, both clients because they're both clients at that point. But more importantly, it helped them learn, learn more about each other.
[00:34:46] Speaker C: Great. Well, gentlemen, I think it was a great conversation. Thank you very much for your keen insights to our audience. Thank you for watching. We hope you enjoyed the episode and we hope to see you soon on another. Thank you.
[00:35:00] Speaker B: Thank you for listening. Make sure to subscribe to the next imperative so you never miss a new episode. Also, visit our
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