Role of a CFO in merger and acquisition (M&A) activity as an administration officer is vigorous. This is because on receiving money from banks, companies pay more for acquisitions and this hurts investment return. A competent CFO must avoid this trap.
The merger or acquisition processes refer to marketing a company to its potential buyers. However, both involves marketing, thus preparing in advance is a prerequisite to see success. Here having an experienced CFO, or an experienced finance controller could be instrumental in getting an optimum price and helping the business. The marketing process includes financial and strategic benefits. A company may be approached by potential buyers anytime and so it is mandatory that the owners stay prepared always. Lack of readiness or unpreparedness is sure to have an impact on the business price.
Before the M&A
Prepare in advance. Start making sure the business is almost ready for the transaction. Otherwise the company would have to get a large volume of data assembled and prepared in a short period of time. If any elements of the data are mismatched, this will undermine the confidence of the buyers and influence the price.
Taking a professional CFO helps getting optimum price. As finance controller due diligence process must be taken, while the business maintains its normal operations and sales throughout the process. The main contact point should be answered very carefully by a CFO and he should conduct the post of administration officer perfectly in the closure processes and negotiations. This should be done two years before by assembling essential documentation, gathering details of finance, intellectual property, HR information, etc. Lack of consistency is dangerous as it may undermine the potential buyers trust.
During the M&A
The forecast information should include all the synergy benefits of globalization and sales featuring cross-sales. Product development is important, create products showing market potential. The CFO should identify synergies and explain why the buyers will benefit. He should create a credible forecast revealing commercial sense in different areas of the buyer’s business supporting sales and marketing.
Moreover, a CFO should show the cost savings factor on the merging or acquisition process. For instance, making savings on administrative staff as the buying company has these functions.
An experienced CFO in M&A can advise the company on the support they need prior to entering the M&A process. This means legal advice, on the intellectual property lawyers, and also on health and safety analysis, besides employment contracts negotiations.
After the M&A
After the M&A transaction closure, the post-merger success of the company depends on the quality of relationships developed in the sales process. The CFO should possess the ability to maintain good relationships and help personally in the sales process, thereby improves the business prospects in the new set up.
- It is important to pursue business as usual during the process of M&A transaction. This creates a lack of reliability driving the company’s value.
- Maintain emotional distance during M&A process so that it does not hinder negotiations. Avoid taking criticism personally in this process. Have a CFO who makes pragmatic and dispassionate decisions.