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CFO Michael Cox says that it was near the end of 2022 when the IRIS Software Group began to realize that the guiding philosophy that had motivated and incentivized the UK-based software company to complete 30 acquisitions within 6 years needed an upgrade.  

Cox tells us that the IRIS management team was discussing the business cases for yet more acquisitions when the group began to banter about the same deal-making \u201cmultiples\u201d that had successfully guided the company prior to the pandemic.

\u201cI was sitting there thinking, \u2018Hang on a minute! These multiples would have us potentially spending as much on these businesses as we did pre-COVID\u2014but in fact the cost of debt has doubled,\u2019\u201d recalls Cox, who adds that while IRIS management was certainly aware of the various factors (inflation, a sudden rotation of UK prime ministers, Russia\u2019s war on Ukraine) that had contributed to the UK\u2019s tepid business climate, there was not yet consensus around how to incorporate them and the resulting increased cost of debt into the firm\u2019s business-case decision-making.

In the past, Cox tells us, a typical business-case meeting might have involved a discussion around whether IRIS could continue to invest in an acquired company in order to allow it to achieve new growth\u2014which would make it a worthwhile target. However, it had become clear that such deliberations now needed to consider speed to value as a key contributor to future M&A success.

According to Cox, \u201cWe needed to be thinking about how quickly we could generate the value that we wanted to create from these acquisitions.\u201d

While revenue synergies and cross-selling opportunities between IRIS and potential acquisition targets would remain key selling points for any executive advancing the business case for a particular deal, Cox would ask the room to study the prospective acquisition over an 18- to 24-month time span and prod executives for ideas or suggestions.

\u201cI\u2019d ask, \u2018How do we generate cross-selling more quickly or invest in this company in a way that makes the business more successful more quickly?,\u2019\u201d remarks Cox, who notes that one trait that might distinguish his post-COVID vs. pre-COVID finance leadership is a willingness to push back.    

Says Cox: \u201cSometimes you\u2019ve got to be that unpopular voice in the room and that sort of glass-half-empty person because it\u2019s important to understand the overall impact of the cost of capital on the value of IRIS as a business.\u201d \u2013Jack Sweeney