Using Experienced CFOs During M&As
The importance of using services provided by experienced CFOs is key when working on merger and acquisition projects (M&As). The role of the CFO is not what it once was. Where previously they had been a silent and passive partner, working in the background to procure financing and organize accounting, CFOs today are increasingly involved in strategy and planning that underpin the vision and creative direction of the organizations they support.
When considering whether to acquire or whether to merge, often the key target is the potential profitability of the merge or partnership. So, who better to identify these aspects than the CFOs that have a clear understanding of both the organization’s finances and vision?
But not every CFO is equipped to handle M&As. Understanding how well two or more organizations might fit together comes down to more than money. What looks good on paper, isn’t always the full story. When deciding whether to merge or acquire, hiring an experienced CFO is key.
Successful Integration with and Experienced CFO
Where the finances might suggest an acquisition, a skillful analysis of the company culture might indicate that a better suit is a merge. Despite companies and organizations spending more than 2 trillion dollars a year on M&As, these deals fail 70-85% of the time.
Experienced CFOs are vital in helping CEOs understand and measure their expectations within the scope and reality of the true impact the M&A will have, not what the CEO desires it to be. The deal may look great on paper, will boost the company’s performance, and help them maintain their market share. However, frequently, too much is spent on an acquisition that then fails to perform because it is unsuccessfully integrated with the current company values and culture.
A good CFO will already be managing a company’s finances, allowing the CEO and management structure to focus on the important day to day tasks and operations. But a great CFO, will be engaged with strategic development to ensure long term financial security, longevity and profitably.
The Weight of the Moment
When we remove organizations that solely trade in M&As, the sale, merge or acquisition of a company is likely to be the most important transaction of that business’ operational lifetime. There is a lot at stake, and anyone would be forgiven for being blinded by the dollar signs and making a mistake that could potentially crash their hard-built business’ reputation and value.
Contracting a CFO to help manage the weight of the moment is an excellent way to ensure you are not swept up in it, or in some unfortunate cases, pushed to settle for a worse deal, just to get the process finished.
The better an organizations’ finances, the more likely they are to maintain their market share and remain active and profitable. It can be hard to plan and account for the future, while also running a business. Future proofing isn’t just about quietly managing existing funds in the background. You want and need a CFO that can provide detailed strategic plans, offering multiple potential M&A opportunities when the time is right for growth and expansion to take place.
Consider the merger of Google and Nest. On paper, it was a financially sensible option that stood to make both companies wealthier and yet, the company cultures were at odds with one another. This stalled innovation and destroyed internal relationships, tanked their combined value.
Part Time CFO Services
We take a forward-facing long-term approach to create not only successful businesses, but also successful relationships. One that focuses on:
- Analyzing and understanding the organizations and employees involved.
- Fully exploring the company culture to generate the best options for successful and compatible M&As.
- Offering highly skilled and experienced staff to provide not only the best financial services, but also strategic development plans for future M&As.
Our view is one that considers everything that makes a merger or acquisition successful. Using our experience to combine the objective reality of the organization’s finances with the subjective experience of company culture, we create opportunities in the best interests of all parties. If you are considering a merger or an acquisition, consider us to help.
At Part Time CFO Services LLP, we recognize the value of your time and are fully equipped with the expertise necessary to ensure that your business is managing your risks efficiently. We are a team of highly skilled and experienced CPAs, and Financial and Data Analysts. We work with you to assess, analyze, evaluate, and treat risks threatening your business. Let us help you with your financial planning needs so you can direct your energy to developing and growing your business. Contact Us