Lessons Learned at IBM

In his own words, Michael Pellini outlines how the business practices he learned at IBM can serve companies of all sizes

I have spent most of my career providing internal counsel to growing technology companies.  I have also provided counsel to established corporations, including nearly four years at IBM in which I was responsible for M&A diligence, negotiation, and postclosing integration of numerous acquisitions. I gained firsthand experience with IBM’s well-honed and highly effective M&A business practices when it acquired my former company, Unica.

As I help guide my current company in its current growth trajectory, I have realized that, though IBM is a technology giant—in size and legacy—many of its practices and philosophies are also applicable to legal and business practices of smaller scale organizations.

Stay flexible and adaptable

Technology, markets, and people are constantly evolving, so companies—and legal departments—need to do the same. IBM has gone through incredible recent transformations: from focusing on infrastructure hardware to emphasizing enterprise software, and ultimately to its “Watson” artificial intelligence offering. Flexibility is key when projects and priorities—or the person you report to—can change overnight. I find that knowing how to work in a dynamic, shifting environment has been invaluable in being able to envision the transformation we’re in the process of creating here at Kaseya.

When it comes to M&A, nurture the people and the business

For acquired companies, integrations are often periods of upheaval and painful transition. Employees lose their jobs, management changes, and legal departments dissolve. Those who remain often find themselves working for a company that is larger and more complex than the one they started with.

In addition to evaluation and diligence before acquiring a target company, there must also be a comprehensive and sensible integration strategy. This means ensuring that the acquired business continues to operate effectively—generating revenue despite ongoing changes. At IBM, I became a plug-and-play general counsel when I was “dropped into” acquired companies to provide counsel and operational transitional guidance. Regardless of the size of either company, it is essential to make sure the acquired organization and its people are still able to do what made them valuable and attractive in the first place.

Be practical

Legal departments should always be the grease in the corporate wheels, not sand in the gears. Remember that in addition to protecting the company, our obligation as lawyers is to find ways to make it possible for consenting parties to do business. Too many attorneys look for reasons to say “no.” If negotiations reach an impasse, I always try to get to the heart of the opposition’s true concerns. An entire redlined paragraph can often be boiled down to a single articulable fear. It’s almost always something that can be addressed to everyone’s satisfaction with manageable risk to the clients.

Leverage your metrics

IBM is the king of data, but it’s key for businesses of all sizes to understand their own internal patterns and trends. Why have particular customers gone to competitors? Is the customer churn rate within acceptable margins? Are we adding new logos faster than we are shedding old ones? When I arrived at Kaseya, we were weak in certain areas, but no one knew it. Having the right data-driven reporting systems is crucial because you can’t fix what you can’t see.

Build strong relationships with outside counsel

Small and midsize companies need to invest in external expertise. At Kaseya, for example, we have partnered with DLA Piper for technical guidance related to the company’s tax structure. As general counsel, it’s nice to know that experts are handling areas outside of my direct expertise. In my experience, it’s what you don’t know that ultimately hurts you the most. So never neglect the importance of building partnerships with appropriate outside knowledge resources.

Keep staff motivated and enthusiastic

IBM has always done a great job of hiring the best people, incentivizing, rewarding, and retaining them. To maintain motivation, responsiveness, and enthusiasm, I strive to offer my staff challenging assignments as well as opportunities that help to increase their knowledge and expertise. If someone happens to be particularly productive at a specific task that’s highly beneficial to the department, not allowing them to diversify and learn new skills is a surefire recipe for boredom, apathy, and an early exit.