Role of the CFO in Mergers, Acquisitions and Integrations

What makes mergers, acquisitions, integration difficult?  Not every deal is done by the same rules, and no one strategy fits every company.  One thing is for sure — facilitating a transaction or liquidity event is as much art as science, and many industry professionals would argue that the CFO must play three essential roles in order for the deal to work:

1. Strategist – In addition to the CEO and other key executives, the CFO must wear the hat of a strategist during the process, and this goes beyond merely looking at the numbers and deciding whether or not multiples on the table makes sense.  Does the acquisition or divesture fit long-term corporate strategy and vision?  What are the pitfalls that everyone’s overlooking?  Companies without COOs often have CFOs who translate numbers into implementable action items, and this is a logical extension of such responsibility.

2. Synergist – Positive synergies do not just appear in thin air.  If it’s there, it must be fostered in order to reap the rewards.  Same with the negative synergy.  If not addressed or extinguished right away, like a wildfire, it will grow until the entire deal is consumed.  The CFO must manage the synergies, both positive and negative, and seek answers to the fundamental issues and questions at hand.  What are the drivers?  Do we have the right people with right incentives to accentuate the strengths while addressing the weaknesses?

3. Integrator – By this I mean wearing the hat of Chief Implementation Officer.  This is where a CFO’s project management skills (by nature, we are type A, detail-oriented professionals) come in handy, and he/she must roll up the sleeves and their hands dirty.  Run or participate in meetings – implement, monitor, assess and adjust, as my former boss used to tell me.  I’vesbeen brilliant deals fail to live up to their billing due to poor integration efforts.  CFOs must take charge.

Does this mean other executives are chopped liver in the process?  Absolutely not.  Everyone, from a junior analyst to the CEO, plays a critical role in the process of being proactive and identifying opportunities.  This is just one perspective from a key position.  One thing for sure (said I it twice on this post) – if the synergies are not achieved, CFOs are ultimately accountable and stand on the firing line for explanations, so they might as well dive in head first and take control.

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About Richard Lee
Experienced finance and operations professional. Currently partner in five companies, adjunct professor of economics at Columbia College and executive contributor to a small business blog (www.SMBmatters.com); following corporate finance, M&A and management consulting tenures with Orbitz and Diamond Technology Partners; and six years of service with the United States Army.

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