How Estefany Marte Beat the Odds When 75% of Mergers Fail

Estefany [00:00:00] Data is always changing as we know so one thing I see a lot during those moments is the stalling of the decision making by the leadership team and it's almost like. They believe, or we all believe we have this bias where we think that we're, at some point we're gonna have the perfect data and the perfect information and the perfect situation and that is never the case

Hector Hello, and welcome to another episode of the How to Scale Business Podcast. My name is Hector Santi Esteban, and I am your host For today, our special guest is Ms. Stephanie Mar, and she is a expert and a advisor in leadership, transitioning and, and leadership. the ultimate development aspect of it.

Hector And so Stephanie, thanks for hanging out and spending some time with us today.

Estefany Awesome. Hector, thank you. Thank you for having me. It's quite an honor. I'm excited to be here.

Hector love bringing on people who, have a perspective and have insights like yours because you've been, had, you've had the opportunity to work with a number of, different clients and different businesses and, you know, help them through something that we haven't really spoken on, [00:01:00] very much.

Hector And that's because so many people are trying to get their leadership. structure in place. and I think that you sort of come in when, when either that it has, fulfilled its path or in some instances, the owners are sort of bestowed, and sort of forced into this. So I'd love to hear how you sort of got onto this path.

Hector And then I'd love to know, you know, maybe clarify, a little bit about what you do with your clients, if I've sort of misspoke or misrepresented it at all.

Estefany Absolutely. Well, everything started, I took over my family business when I was only 20 years old. So if you want to talk about leadership transitions, how about that?

Estefany I was basically taking over and I had to adapt and, I had to take over in a very complicated family situation. things I had to learn, you know, learn as I went. I had a lot of formal, training, but. Basically my experience and my background comes from having boots on the ground and learning things through mistakes and a lot of twists and [00:02:00] turns in a business.

Estefany It was a manufacturing business since went fantastic. I scaled it times eight in about five years, and eventually I did a very successful exit. Then I jumped as a CEO of the company that acquired us and the company that I sold, which meant that that was my first merger that I had to lead. I was about, 26, 27 years old.

Estefany and one thing I learned very quickly, Hector, is that if you don't scale at the same rhythm of your business, your business is gonna have a roof. You're never gonna be able to scale it. If you don't scale at the same rhythm, and that means the way you make decisions, that means the way you show up to your team.

Estefany That means the way you present your plans. And as you can imagine, it's not the same, a family business, then a corporation, then a business going through a merger, then a business that is going through a crisis. And, the things that I focus on with my customers and among the audiences that I speak to, because I'm also, an international speaker.

Estefany Is [00:03:00] how do you not only navigate a leadership or a business transition, how do you grow massively through it? Because transitions, you know, that moment, I always like to compare it like, you know, that moment where the river is going to into the ocean, it needs to stop believing it's a river and to start believing that it is an ocean.

Estefany And that is the same thing that leaders need to do. When they're scaling their business, and sometimes, as you know, that happens linearly, you know, slowly, maybe 15% year on year growth, and sometimes you do an acquisition and suddenly you're twice, three times, six times as big as you, you were before, right.

Estefany so you need to be able to scale your leadership style systems, the way you make decisions, and the way you show up to your team so that during that transition, not only you're handling the emotional rollercoaster that everyone around you is going through, which is normal, but also your own. And how do you [00:04:00] grow through that?

Estefany How do you make sure that you not just survive it, but you grow massively through it?

Hector And when you are sort of advising a, a company or you find companies sort of in this position where they need your sort of support, are there any common pitfalls or any common mistakes that you see people making that sort of, end up really limiting their, their success or, or their ability to thrive through this period?

Estefany Absolutely. One of the pitfalls I see a lot is that people romanticize, some things when, for example, the growth is done through, an exciting thing like an acquisition. Let's say you acquired a business and obviously as we all know, what process, to acquire a business requires. Sometimes the lengthy process of due diligence.

Estefany You're, you know, working there with advisors, with your team, evaluating if this is the right business for you, and suddenly you start romanticizing the idea of this business being acquired by [00:05:00] you and merging it into your existing, mature, already running operation. So that is one thing to avoid. You need to be very realistic on what you're seeing, what the synergies are, which are what, or the savings.

Estefany All the efficiencies, all the overlaps that you think you see, you need to make sure you see those and then evaluate them from a realistic point of view. The other thing that happens is that, leaders stall during decision making. And you might think, or people might think is like, no, I'm taking my time.

Estefany I'm gathering data, I'm evaluating my options, and that is all necessary and true, but after a certain point. When you stall decisions, it is the high cost for the business because the team starts to lose traction and trust in the leadership. You're gonna lose opportunities. You are not gonna be able to see things clearly.

Estefany Data is always changing as we know. So one thing I see a lot during those moments is the, the [00:06:00] stalling of the decision making by the leadership team. And it's almost like. They believe, or we all believe we have this bias where we think that we're, at some point we're gonna have the perfect data and the perfect information and the perfect situation, and that is never the case.

Estefany So at some point, eventually, when you believe you have 60, 70% of the information at hand, you need to pull the trigger and then adjust as you go. The third pitfall is. This belief that we have, that things are gonna be perfect in some way, shape, or form. They never will. You need to be okay with good enough, good enough to move forward, good enough for the team, good enough for you to delegate effectively to your team so that you can scale to a higher role, a more strategic role, and focus on the vision, the culture, and actually making that transition successful and leading to growth.

Estefany Those are the three main pitfalls I see.

Hector And are there things that, allow somebody to [00:07:00] put systems in place ahead of time? I mean, to where, when this sort of situation emerges where they have to transition or there, you know, there is a, a big event like a merger. what are some things that businesses can have in place that sort of make that process go smoothly or, allow that transition to be more, more successful?

Estefany there's definitely things you can do to prepare, right? As I said before, make sure you gather the data, but don't over romanticize it. Make sure you are objective. Look at it through, through a third party. Get someone to look at it with you. whether that is a group of, you know, your leadership team advisor, someone you trust, a thinking partner, someone that would look at that information with you, make a plan.

Estefany That this coherent with the vision you have for this new phase and that not, that doesn't apply just for mergers and acquisition. That also applies for a family succession, for example. That applies when you're about to take in on a new role or you're gonna [00:08:00] step into a different role and level with your own business.

Estefany you need to also, um, you need to also make sure to remember, I love this phrase by Mike Tyson, where he used to say, everybody has a plan until they get punched in the face. And, you know, as entrepreneurs you eventually learn that you're gonna have to face a lot of things that you didn't know, that you didn't know.

Estefany So it is very important that you also realize that you're gonna have to adjust and you're gonna have to fly that plane and fix it while it's flying. And that is why the importance of having clarity of strategy and decision making that is done on a timely matter is important because it is never going to be perfect.

Estefany You're always gonna have to do adjustments, but then that means that you need to have the ability. To adjust that things come up and you need to be able to do that on a timely matter. So I think at the end of the [00:09:00] day, you can prepare and there are definitely things to do. You need to look at the people, depending on the, the transition situation.

Estefany Of course, it's not the same. If you're gonna acquire a business, then if you are just going through a big, growth plan for the next five, 10 years, or if you're going through a family business succession, right? So depending on the situation, I always like to look at vision, which is the strategy. What is it that you want people, the team in place, the people that's going to support you, and that it's going to make this happen.

Estefany And of course, everything that has to do with finance, commerce, and operation. And how are you gonna make sure that during the moment that you're transitioning. That the operation continues smoothly and the business doesn't stop, but it actually grows.

Hector Yeah. I would imagine that, you know, especially when you're, you're merging things or you're bringing in people who weren't part of it, that, that the people part can be such a, a [00:10:00] huge, um, part of leverage,

Estefany 75% of why a merger fails.

Estefany Cultural clash. Doesn't matter if you're big or small. and funny enough, even though we have the data, for some reason, leaders still underestimate the importance of cultural fit and evaluating that leadership team and really assessing if it's the right fit, not for the business that you have right now.

Estefany For the business that will be once the company is acquired and you're trying to integrate it post acquisition,

Hector is that sort of a, in your opinion, do you look at that cultural fit? Is that something that people can fix or work on once they're already in that situation? Or is it really just a, a matter of, doing due diligence at the beginning and finding the right sort of fit, to that company that is going to be built?

Estefany I think if you, if you have the space, which we usually do, you really need to put emphasis on that, on the due [00:11:00] diligence process of, of course, most companies go through due diligence, like, you know, the common sense finances, operations, CapEx investments required, you know, commercial plans. Et cetera, et cetera.

Estefany but the people part and the culture part, there are ways for you to assess and evaluate that, and not only through data, which is of course very important. But also how the company has behaved in the past. Have they? Have they done recent layoffs? Of course. A team that has gone through that is gonna behave different than a team that has been consistently growing.

Estefany Have they had a lot of leadership changes before? which means that they might, once you go in, they might think, Hey dude, how long are you gonna last? You know, until the next, leader comes. Have they been going through a lot of challenges lately? Have they gone through a lot of turnover lately? How do the leadership, the team, makes the decisions if you can evaluate the [00:12:00] last couple of decisions and see how they assess the problem.

Estefany What kind of criteria they used to make the decisions and if the decision didn't go their way, how they behaved. So yes, there's definitely ways for you to assess cultural fit, and it's definitely something worth putting your energy, your money, and your time on as well as you do with legal, as well as you do with finances and as well as you do with taxes.

Estefany Because at the end of the day. 75%, which means almost eight out of 10 mergers fell because of cultural fit. They fell also because we tend to forget because we are in a business environment and we're, you know, trying to scale and growth this, we forget that there are humans behind everything. And humans, as you know, are very emotional, emotional beings making.

Estefany Trying to make rational decisions. So when you're going through a transition, whether that is a [00:13:00] merger, whether that is a crisis, whether that is a succession in a family business, there's a lot of anxiety. There's a lot of of fear and stress as it's normal whenever human beings are going through change, and as a leader, you need to take that into consideration because if not.

Estefany Whatever decision you make from a black and white perspective, from an Excel sheet perspective will most likely fail because you need to assess and you need to compound into your decision making, the emotional and the people component of what, of that decision that you're making.

Hector Yeah, this is so insightful, and especially for businesses who I think are, are going to be approaching this sort of transition or looking at utilizing mergers and acquisitions and, you know, in the coming future.

Hector Stephanie, when we get back from break, I, I'm more curious on some more of your frameworks or you know, how you've been able to structure some of this process. 'cause it seems like such a big [00:14:00] can of worms and so. I'm curious how you've sort of simplified that or, or how, you know, we can help the listeners to further simplify that.

Hector And so we're gonna get into that, right after this quick break.

Hector Hey, all. Today's episode is brought to you by Amplify Media, and we are a podcast and content production company. Well, we like to think of ourselves as like the fractional media part of your company because chances are, if you're listening to this, you probably have a product, a passion, a mission, a message, some sort of service you're trying to get out into the world, but you might not have the time, the team or the tech skills to be able to do it.

Hector If that's the case, we can help Go to amplify media.com. That's A-M-P-L-A-F-Y Media do com. You can also check the show notes for the link. And with that, let's expect is, let's get back to. Victoria, let's try that again. And with that, let's get back to Stephanie. So Stephanie, how do you help someone to see the process?

Hector Is it sort of a, is it a recipe, is it a set of pillars that people have? You know, it seems like a very bespoke and, and even sort of nebulous process. [00:15:00] But I would imagine that after doing it, you know, a number of times or being around these sort of scenarios, that there are some sort of common themes or, or common elements that are important to focus on.

Hector What, what are some of those and, and how do you sort of structure that?

Estefany Yeah, so whenever you're gonna step into a bigger role, whether that is you as a leader or whether that is at a business level, You need to make sure if you can, right, if you have the time, that is assuming that you're not taking over a business during a big crisis, and someone called your board calls and says, Hey, you're stepping in tomorrow, which is almost never the case, but let's assume that you have certain amount of time to plan.

Estefany Make sure as much as you can that you study the information without trying to make a perfect plan for what it'll be like once you're there. So make sure you leave room for you to have that mental flexibility and adaptability to know that you will have. To do adjustments on the [00:16:00] way as you fly that plane, right?

Estefany So the number one thing is for you to take the time to explore and really understand the team, the operations, and how things will look in that new future. And that applies the same as if you're taking over a new leadership role as if you're stepping into a business that you just acquired. And it is day zero from that acquisition, right Mo?

Estefany I like to see it in, in worlds of a hundred days. Sort of like the precedents, right? When they, when they take over, they have their first a hundred day plans. It's the same thing here. You make sure you have a first a hundred day plan because it takes about 90 days for people to form an opinion of you as a leader, if you will deliver or not on the initial promises that you make.

Estefany If or not your plan makes sense and it kind of sticks with the leadership team. All those things happen in the first a hundred days. So it is very important for you to use those wisely so that you [00:17:00] gain credibility, whether that is with your boss, with the board of directors, with the investors that you raise capital from, with the team.

Estefany And in those first a hundred days, the first part. At least 30 days of that. It is all about learning the new scenario. So you need to have the humility and the openness to look at things, processes, people, systems with clear open mind and as much as you can. Shut up. Listen and open all your senses. Try to not have the bias.

Estefany If you are from that industry and you're an expert in that industry, try as much as you can to keep an open mind. And what that will give is it will open up people to tell you things. That they wouldn't tell you if you're all the time trying to give them a fix or try to tell 'em how they could do it better or anything like that.

Estefany So make sure you take at least 30 days to explore, to ask open questions to the [00:18:00] team, to go to the floor as much as you can. If this is a manufacturing logistics or a company that requires boots on the ground as as much as you can, try to go to the floor and really understand the operations from all different levels, right?

Estefany Try to understand. Listen to people. Look at how the people behave. Are they looking at each other in the eyes? Are they shying away when they see you? Are they scared? Do they look too stressed? Do they, does do, does the environment feel heavy? Like is there conflict? Is people tense? And that will give you hints if you have a leadership and management issue in that, in that operation or in that department.

Estefany After though that period is over. Then with that information, you can complete the plan that you've been working on since before, and trust me, it will change if you've done that first step exploration, right? You will gather so much valuable data that for sure [00:19:00] you will need to adjust the plans that you have been forming, right?

Estefany Then you need to go through a period of selling in that plan. When you sell it in, unless you're a solopreneur, which of course you're gonna have to sell it to your, to your market and to your client. But if you're, leading a team, you're gonna have to sell that plan to the team. You're probably gonna have to sell that plan to a board of directors and all the stakeholders that will help you to make this happen.

Estefany Then you need to integrate that plan. So you have to plan before. You need to explore and really learn everything that's going on, then you need to integrate those lessons or learnings into the plan. And then you can say that you have a plan that has been somewhat adjusted to the situation that you're going into, whether that is, like I said before, a job, or whether that is a new company that you acquired and you're trying to merge.

Estefany And during those first hundred days, make sure you [00:20:00] also include. Moments where you're gonna do pulse checking on the team, since we were talking before about the culture, make sure that whether that is with ar, with HR or whoever you have to support you in the people's area is how is people reacting to this change?

Estefany And lemme tell you, it doesn't require a merger for the, for a team to react to a change. Because one of the biggest things that can happen to you in a business environment. Is that they change your boss when they change your leader. Right, that that creates a lot of uncertainty because you don't know if the new leader's gonna like you.

Estefany You don't know if they're gonna fire you. You don't know if they have someone else thought for your position. So there's a lot of anxiety going on. So make sure you do routine checkups on people to make sure that things are, stable because. Moments of transition are very sensitive for [00:21:00] people. So they start looking for other opportunities.

Estefany They start updating their LinkedIn page, they start updating their cv, and the least you want is a leak of talent. And usually when you're gonna do a big change. You know how it is, the competitor finds out, the market, finds out, clients find out, and you need to make sure to keep that in place so that you don't lose talent and that you make sure you retain the best possible talent in a critical situation like this.

Estefany So just to wrap it up, it's make you sure you plan ahead. Then you go into the exploration phase where you're kind of confirming the hypothesis you had, but on the floor, on the ground with the people. Then you adjust accordingly after you've done that gathering of data and information. You do checkups, especially with the team, making sure that they're handling that change as well as possible.

Estefany And then you're going to integrate the improvements that you have gathered so that they can [00:22:00] sustain in time and in place with the systems that you have.

Hector Yeah, I could see how they all sort of work together and how, you know, doing that, that, Data gathering is sort of what you called it, is so important, especially because I would imagine that so many of the, the pitfalls of the challenges are not necessarily systems based or processes based, but that, you know, the human part of it, you know, really, really plays a, a role or create some, some unseen friction that can throw a big wrench into whatever plans are sort of laid upon them.

Estefany Yeah, absolutely. Absolutely. And that is why it's so important for you as a leader to scale up and to rise to the expectation of that challenge. and do not underestimate how challenging it can be for you as a leader. And, that is why I like to do emphasis on the importance of preparation, but also on the importance of being aware that you will have to adapt and change.

Estefany That is the beautiful [00:23:00] thing of a transition as well, because it allows you to see new things about yourself. It allows you to test yourself under a lot of pressure and, make sure you observe what happens there. So, because that would, that is the thing that will allow you to grow. It will allow you to expand yourself as a leader, and then your business will get to your level.

Estefany It doesn't happen the other way around. From my experience, when a business kind of stalls and cannot grow and keep on scaling, it's not a matter necessarily of capital or system. It's a matter that the leadership has not gone to the level it requires because a leader that is up to that level will be able to raise the capital.

Estefany Able to figure out the problems that are going on in the operation. But first, you as a leader, need to scale there. You need to go through that path and grow to the level that your business requires in order for you to get to that scale. [00:24:00]

Hector Hmm. Yeah. Such great advice. I got a few more questions here, Stephanie.

Hector One of them that I like to ask our, our experts on the show is what sort of signal, are they sort of paying attention to? And, and the reason I say it like that is there's so much noise out there and so many things happening, so many things that are changing, whether it's technology or politics or policies or e economies.

Hector what sort of things are, do you think are worth paying attention to for business owners out there right now?

Estefany Well, you know, of course we cannot not talk about everything, you know, that's going on from a geo geopolitical perspective. there's a lot of uncertainty. There's a lot of change going on in the world.

Estefany It is very important for us to pay attention to that, especially for us right in the western hemisphere, of the world. I think it'll be challenging the next common years, with new policies, with new order of how things are [00:25:00] done in the world from previous, ages. So it's very important depending on the business, of course, that will affect or impact differently.

Estefany but it is very important to keep an eye open in that and see like, don't. Assume that something will not happen. I think, if that's something that the recent times have shown us is be ready for anything. And, the other thing to look at course is technology and, how is your business and how are you as a leader adapting to AI and not just adapting?

Estefany How are you going to seize the opportunity that it brings because. Even though it seems like so much has been done, it is still the early stages and I think the best is really, to come. so it's up to us if we get on the wave and how we get on the wave and how we can make sure we leverage that for our business.

Estefany the opportunities here for us to do that and whether that is optimizing your [00:26:00] business so that you have more time to enjoy all those things outside the business, that's great. Or whether that is scaling your business. Those things will definitely bring change and bring, exciting things and bring anxiety and through that entire process, make sure that you really understand what it is that you want at the end.

Estefany What it is that, what do you wanna get out of the whole thing? and how do you see yourself running your business in the next three, five years? Then you need to make the decision, how are you gonna face the challenges and the threats that we're facing? And how are you gonna seize the opportunities that you're facing?

Hector Hmm, fantastic stuff. if people wanna get more connected with you, get deeper In your world, where is the best place for people to go and, and follow up?

Estefany Yes. they can follow up on www, that's stephanie martha.com. and also on LinkedIn [00:27:00] I post almost daily, about the subject of leadership transitions go growing through transitions and, all the mindsets required for that.

Estefany So, I'd love to see you on my feed.

Hector Wonderful, and we'll link that up for you listeners as always in the show notes. And my last question for you, Stephanie, is in your opinion, what is the secret to scaling a business?

Estefany In my opinion, the secret to scaling a business is scaling yourself as a leader, making sure that you scale first.

Estefany If the thing happens the other way around, trust me, the business will break you. That will either mean losing opportunities that will either mean, costs, or it will mean you burning out. But you do need to make sure you scale first as a leader, and then the business will follow. Because as we know, we, we can get the capital, we can get the resources, we can fix people, problem, operation, finances, but if we as a person don't have the right [00:28:00] mindset, the right condition, the readiness to get to that level, it will either happen and not go the way we thought it would, or it won't happen at all.