A Conversation with Richard Davis About Listening, Learning and Leading

One sentence on LinkedIn sparked today’s post.

Yes, a comment shared by a fellow W&L alum, Melissa Sawyer, inspired me. She noted:

Much attention is being paid to the well-orchestrated CEO transitions at Merck and Amazon this week, which reinforce the important role that thoughtful succession planning and good governance play in corporate America.

A partner in the law firm of Sullivan & Cromwell, I interviewed Melissa as part of our Looking Ahead series in 2019. Since meeting her, I continue to find her perspectives on governance and regulatory issues timely — and spot on.

So when I saw her take on Kenneth Frazier’s and Jeff Bezos’ career decisions this morning, my mind immediately went to a conversation I had with the former CEO of U.S. Bank about his well orchestrated succession plan.

Filmed in advance of our exclusive Inspired By Acquire or Be Acquiredcontent pop-up,” Richard Davis provided valuable insight into sharing intelligence to build others up. He also explained the steps he took to position his successor, Andy Cecere, for success. Rather than edit my conversation down to just that clip, here is the full conversation between Richard (now President & CEO, Make-A-Wish Foundation of America), and me.

We start by talking about culture, purposes and values (1:21). Next, how industry leaders can inspire the societies and communities they serve (5:06). We talked about laying the foundation for a well received transition (8:20) before exploring the equation IQ+EQ+CQ (12:22). Finally, how companies become places that employees want to work for (15:49).

#AOBA21

*Another dot to connect? Our Editor-at-Large, Jack Milligan, talked with the Senior Chairman of Melissa’s law firm, Rodgin Cohen, as part of this digital program. The two explored the heightened cybersecurity threats facing banks today, his outlook for bank M&A in 2021 and how regulation could change under the Biden Administration. For those with access to Inspired By Acquire or Be Acquired’s exclusive digital content, take a look at An Interview with Rodgin Cohen.

The Transformative Deal in Digital Health

WASHINGTON, DC — Over the past few months, I’ve shared several transformative technology deals in the financial sector on this site and in virtual presentations. From Visa acquiring Plaid to MasterCard picking up Finicity, big name players paid big time premiums to acquire technology companies to boost their games with consumers. As CEOs and their boards wrestle with competitive pressures and explore new paths to remain relevant, a huge announcement in the health space caught my attention. In fact, it reminds me of a recent bank M&A deal.

Why This Deal Matters: The Changing Competitive Landscape 

Much as last year’s deal between SunTrust and BB&T — which resulted in Truist — reflected the pressures of our digital-first world, so too does one struck in  another heavily regulated (and also incredibly important) industry. This one, between Livongo and Teladoc, impacts the whole digital healthcare market, creating a combined entity worth $38 billion.

As shared on CIO.com, Teladoc already has a significant presence in hospitals, many of whom are white-labeling the Teladoc platform for providing telehealth services, often using the Teladoc physician network to complement their network of doctors within the system.

In parallel, Livongo’s success in remote management of chronic care appears a natural complement to that business. Indeed, their whole-person platform empowers people with chronic conditions to live better and healthier lives.

As the merger release makes clear, “the highly complementary organizations will combine to create substantial value across the healthcare ecosystem, enabling clients everywhere to offer high quality, personalized, technology-enabled longitudinal care that improves outcomes and lowers costs across the full spectrum of health.”

Here, two words stand out: technology-enabled.

 Put another way, we are talking about digital transformation, which, as I recall, anchored SunTrust/BB&T’s deal.

Another Example That Scale Is Good — But How You Leverage It Is Key

Last February, BB&T and SunTrust Banks’ all-stock transaction (valued at $66 billion) was the largest U.S. bank merger in over a decade. It spawned Truist, the sixth-largest bank in the U.S. by assets and deposits. In the initial press release, both banks’ CEOs cited the desire for greater scale in order to invest in innovation and technology to create compelling digital offerings.

While Teladoc and Livongo have both been acquiring smaller startups to expand their capabilities in virtual care and digital patient engagement, it appears both are falling in Truist’s steps.  Together, the new organization promises to offer a broader set of digitally-enabled services and capabilities across an individual’s health journey. 

Given the incredible size of the combined digital health entity, I am reminded of a special episode of Looking Ahead with Keith Pagnani of the law firm Sullivan & Cromwell and Andrew Rymer of the investment bank Centerview Partners. Filmed last year at Nasdaq’s MarketSite, the three of us talked about what’s driving healthcare deals and what the regulatory process looks like for transactions.  While we focused on the combination of CVS and Aetna, I think you’ll find the rationale applies for Teladoc and Livongo.

*If you’re interested in M&A and IPO activity in the health sector, our DirectorCorps team recently introduced “The Deal on Healthcare.”  A bi-monthly communique, it rounds up the most notable announcements.  To sign up for this free newsletter, click here.