Every chief financial officer understands the pressure to earn returns on a company’s cash holdings. When combined with the often-complex dealings required of a merger or acquisition, many CFOs may consider rushing a merger or acquisition through the finance department just to relieve the tension, even if it means the due diligence performed is insufficient. Even when due diligence is carried out, it may have missed a crucial question or failed to fully contemplate the risks the acquiring company faces.
When a merger or acquisition fails, the CFO often has to face investors’ ire. How can a CFO shoulder the responsibility of shaping a successful M&A strategy? Learn to spot and avoid common pitfalls by applying these tips:
- Don’t let optimism eclipse strategy. Big dreams and big visions are the job of managers and the executive board, but a CFO should stay focused on the tough questions. Do the digging required to determine how a merger or acquisition will affect your company and whether the objectives posed by the deal make sense.
- Look for culture fit. Many M&A deals collapse due to a poor fit between the merging companies’ respective corporate cultures. Many CFOs don’t consider company culture, thinking it’s “outside the job description.” In fact, the CFO is uniquely placed to consider culture fit objectively. With no personal interest in the deal itself, the CFO is free to consider all the ways it will or won’t work – not just the numbers-related reasons.
- Find out why the other organization is selling. Move beyond the assets and liabilities and focus on the motivations behind the sale. Why does the other company want to merge with or be acquired by your organization? What do they offer, and why are they no longer interested in making a go of it alone? Find the handful of key risk issues and focus on them.
- Plan, plan, plan. Just as a CFO should not let optimism override strategy, a CFO should not let optimism override planning. Know ahead of time what will happen at each stage of the process and what role each person will play. Extend the plan into the integration stage to ensure a smoother transition.
At Daley and Associates, our experienced Boston-based recruiters place financial professionals in positions throughout the Northeast. We can help you find the next step on your career path or transition into a financial career from another field. If you are looking for CFO jobs in Boston, contact us today.