Steve Demetriou built two companies, Aleris and Noveon, in part through mergers and acquisitions. Steve, now chairman and CEO of Jacobs, has more than 30 years in leadership and management roles, where he gained broad experience in a wide range of industries — metals, specialty chemicals, oil and gas, manufacturing and fertilizers.
Steve shared his three rules of dealmaking with the Aspire 2017 audience during a question and answer session with Smart Business CEO Fred Koury. Following is a transcript of the above video, edited for readability.
Three rules of dealmaking
Well, every deal's clearly different, but I'd say the three rules that everyone should follow, and we follow it, is number one, it's got to start with strategic fit. And it's amazing how many companies will buy something without really tying it back to a strategy, maybe not even having a strategy. And, for us, it's always about where's the market — what's growing out there? Where are the markets? What are the new products? What are our strategic gaps? What do we have to acquire to fill out the competencies and the capabilities to go execute our profitable strategy? And that's what an acquisition should be all about. And so that's number one.
The second is the financial model that creates shareholder value, and that's the metric. It's all about increasing shareholder value. And it's amazing, again, how many companies will buy something to double the size of the firm, to get to this revenue target, or some other metric that doesn't necessarily tie to shareholder value.
And the third rule is you have got to have a post-deal integration plan. And it's amazing how in so many acquisitions, the companies don't get that right, and for us, that's 90 percent of it. Yes, 10 percent is buying it, but 90 percent is having the rigor and the process of monitoring and executing, and holding people accountable to delivering what you promised. And that's over multi years. And you don't just quickly move on to the next deal or the next initiative, you make sure you've got the teams and the process in place to deliver what you promised. And those are the three rules that we always follow.