Future of Technology M&A Series: Interview with Oliver Vivell, Vice President Corporate Development, SAP
This interview is one in an occasional series of conversations with thought leaders in technology Mergers and Acquisitions.
In this interview, Sema’s CEO Matt Van Itallie spoke with Oliver Vivell, Vice President of Corporate Development at SAP.
This interview was edited for clarity and brevity.
Matt: I am so pleased to be talking with you, Oliver. How are you today?
Oliver: Matt, I’m doing great. Thanks for having me.
Matt: Tell us a little bit more about your role at SAP.
Oliver: Sure. I’m working in Corporate Development. That’s the team responsible for all inorganic activities at SAP, be it acquisitions, joint ventures, divestiture, minority investments.
Most of my time is focused on M&A. I run the team which does all the product and technology evaluations whenever we acquire a company. That includes both the diligence before as well as the integration work after the acquisition.
Another hat that I wear is that I run the Bay Area team for corporate development.
Matt: There are two things that I found quite interesting about your background. First, you’ve worked for SAP since completing your graduate education. Second, you started your training as a lawyer. What was your path that led you to SAP?
Oliver: When I graduated from high school and even in high school, I was always in front of my PC. I lived on the Linux command line since I was a young kid and always had a passion for technology.
And then I was out of school and thinking, okay, do I go on the computer science route, or do I choose a very different path? I opted to go down the path of doing a legal education.
In Germany, studying law is a little bit different than the US- it’s a full-time degree that you can take right away.
It could have set me up to become at the end a judge or an attorney, but I had SAP in front of my doorway. I studied in Heidelberg, near SAP headquarters. My ultimate goal coming out of high school — this is not made up — was that I wanted to do something with law. I wanted to work, ideally, in a software company. And specifically, I wanted to work in in Silicon Valley.
Matt: Amazing, here you are.
My understanding is there’s a fair amount of similarity between understanding software and law. They both benefit from logical minds, figuring out puzzles and understanding complexity. It sounds like that was true in your experience.
Oliver: Absolutely. I received a Master in Legal Informatics (LL.M.), and one of the gurus in that domain, Lawrence Lessig has written a book, Code is Law.
When you’re in the legal field, it’s very much like working with code, to a certain degree. There are still some things I use from that legal education, like thinking up structures, solving problems, and assessing risks.
Matt: Makes sense. So, you’re in your dream job at one of the best companies on Earth. What would you say you are particularly proud of at your time at SAP?
Oliver: To be honest, I’m most proud generally of our work. Being in corporate development is a very rewarding role. You have a great impact on the company and fundamentally have also the opportunity to change the face of a company like SAP. SAP has transformed during my tenure there- for example, we cloudified our portfolio — and M&A has been a part of that transformation.
But if I had to pick a particular moment, I would say I was pretty proud of when we acquired Qualtrics in 2018. We ran a very thorough diligence, but we had only three weeks of time. We came out of it with a level of understanding that that made us feel comfortable that this is a very, very good acquisition. Time has proven that it was.
Matt: Yes, that was quite remarkable. What can you share with our readers about SAP’s approach to M&A?
Oliver: M&A is a critical tool, alongside partnerships, in the management toolbox.
As a corporate development team, we are constantly and proactively studying markets, meeting with companies, seeing what’s available around us, where could we go, and being ready to make a move on behalf of SAPs executive management. My regular workday involves meeting bankers, venture capitalists and companies, especially out here in the Valley.
SAP has a super broad portfolio of software to run basically the entire operation and finances of any company out there. So, I always like to explain SAP and what we do as the operating system for a company in all its forms. That means lots of areas within SAP where we are interested to augment our portfolio or to close some technical gaps
We have done it all, super small deals up to transformative deals here and there over the past 10 years.
We are not like a serial acquirer. We are pretty selective and disciplined, I would say, in our approach. It is more a marathon than a sprint in that regard. And I think it has served us well.
Matt: Let’s talk a little bit more about how you guys do it. First, I understand one of the ingredients to your success is a deeply technical, cross-functional M&A team.
Oliver: One contributing factor of course is our German heritage, and the tradition of German engineering as relying on lot of brain power, especially around product and technology in-house.
Very early on, corporate development was already established as a team, that acts like “tour guides” for the business units within the organization. We always had a mix of people from the Corporate Development team and teams that may have not had exposure to an M&A situation in past acquisition projects.
Matt: From where Sema sits, we know that SAP is one of the global leaders of using quantitative code analytics to support the qualitative in-depth work of you and your colleagues.
Tell us a little bit more about why you guys decided to start using code analytics.
Oliver: We like to go very deep in diligences. We don’t like, obviously, any major surprises. This depth of diligence is independent of the size of the company we acquire, big or small.
Our in-house activities bring together a virtual team of experts from the SAP Business Units who are rarely involved in M&A activities, folks from SAPs Corporate functions who have something like a half-time job being in M&A, and full-time experts from my team.
Complementing the in-house teams, we rely obviously on partners that help us with some activities, such as Sema. This approach has worked very well, especially on the code scan side, which we predominantly outsource. Code scans gives us a view on the acquired companies products and technologies that we couldn’t get from our internal efforts. We don’t want to touch the code before we own the company. So, this is a great addition, I would say, to our process.
Matt: Could you share an example- anonymous of course- about some of the benefits of doing the code scan in combination with your team’s deep review?
Oliver: One that comes to my mind, it was from a Sema report, was an indicator for a gap or a dip in developer productivity. Having quantitative data allowed us to drill down a little bit further with the company. What was going on there, it turned out, was that it was due to folks started to work from home during the COVID crisis, which explained the observation. I believe this is a good example of the insights you get when you run these type of code scans, that you don’t get necessarily otherwise.
Matt: I recall a colleague of yours saying after getting to the bottom of that topic, “the data is the data,” which seems to be almost an informal motto of your colleagues.
Oliver: Yeah. The data is the data. But also, there are a lot of lies that you can do with stats. You need to think critically and deal with potential bias. Having a partner that works for you, who cleanses and prepares the data, makes us a lot more comfortable to do the pattern detection.
At SAP, we see a lot of data points, quantitative and qualitative, and we assemble them together in one view, normally. This is what we do.
Matt: Well said, Oliver, let’s close out with one last question. There are so many companies who would be honored to be in a stage eventually where they would be considered to be purchased by SAP. What guidance could you offer companies who are aiming for this?
Oliver: When you talk to a company like SAP, first, do your homework. Study the acquirer’s portfolio, determine where you feel the synergies are and where you would fit. Really, do your diligence in that regard to have a better chance to succeed. A bank can help you, or you can do it on your own.
We get so many requests from the outside of companies being up for sale. It’s a flood, normally, that we are confronted with. You really want to stand out with your idea and make it resonate with the right folks and make it easy for the people working at acquiring company. In large organizations with diverse portfolios like SAP, identifying the Business Unit who sponsors the acquisition is critical.
Second, you need to be prepared as well, have your house in order. It’s one thing to think about an exit and it’s quite another thing to be really prepared for it. There’s a lot of information requests that trickle down as a project progresses, and there’s a lot of things that can still go sideways, especially along the early evaluation stages.
If you appear to be not properly organized, that you don’t have a good view on your contracts, architecture of your product, financials or people and operations — well, it doesn’t leave a great impression.
These things really matter in the setting of information asymmetry where we, as buyers know always a little bit less than obviously you. These issues could quickly turn the whole thing sideways.
Finally, overall, I would say, that getting acquired is a marathon rather than a sprint. You will likely hear a lot of “No’s” along the way when you look for a potential exit. Find the right advisor or advisors and be passionate.
Matt: Well, Oliver, thank you so much for being a part of this.
Oliver: Thanks for having me.