Companies grow both organically and inorganically, and to achieve the latter, they require leaders capable of achieving the best possible integration, considering different cultures, systems and management models, where human capital management becomes the most important factor to consider.
In this context where the role of the CFO, is orientated around the success of the strategic objectives of the organisation, takes on greater relevance, especially when it comes to preparing the company for a possible sale.
This is a ‘consequence’ of the need to focus not only on understanding and managing the financial ‘logic’ of the company, but also the strategic one, where mergers and acquisitions (M&A) transactions are no exception.
Their functions should cover the full transaction cycle, starting with the definition of the first steps to be taken to detect market opportunities, followed by the actual execution of the sale and, if necessary, participating in the subsequent integration.
Numbers and people are the best language for new teams to integrate, define new business processes and optimise the search for synergies. This is why the CFO has the advantage not only of knowing the business and the risks that can be assumed, but also of his or her financial ‘technical solvency’.
Anticipating a possible sale transaction, and thus ‘valuing’ the company, is one of the tasks where the CFO can add the most value. This responsibility is ‘shared’ with the CEO, and the aim is to ensure that the company is an attractive target for potential acquisitions.
Beyond the internal groundwork within the organisation, which includes much more than simply preparing documentation, it is essential to establish the ‘roadmap’ for the execution phase of the sale process. This is an action that can be spread over time, especially if partial divestitures are necessary beforehand.
The collaboration between the CFO and the CEO is crucial in this context. Both should work in identifying the value of the business and establishing financial objectives for a successful sale, always maintaining a shared vision about what is best for the company. The synergy between both is essential for the success of the operation.
In terms of the actual execution of the sale, it is essential that the CFO takes responsibility for ensuring that potential buyers have all relevant documentation and information about the business, so that they can make the most informed and sound decisions.
Proper communication of the key aspects of the business and its associated risks is another of the key tasks to be performed by the CFO, which will allow for better negotiation and, therefore, tend to ‘maximise’ the final transaction price.
Likewise, we must not forget the importance of identifying and quantifying the business synergies that could materialise after the signing, considering both tangible and intangible synergies, as the latter are often the ones that generate greater value in the long term.
All of this, without forgetting the ‘cultural differences’ exist between different organisations. It is here where numbers carry little importance, because the determining factor of success is always people, since it is not possible to achieve this without prior and effective integration of teams.
Therefore, another major challenge for the CFO is to properly manage the emotional side of the business. It is vital to be able to effectively convey the real scope of the operation, the possible changes to come (especially in terms of people) and the future objectives to be achieved.
Becoming, together with the CEO, the ‘main communicator’ of the organisation, is also a task to be performed by the CFO, adopting the best possible language depending on the target audience, something that goes beyond the company's staff and includes all stakeholders, including key customers and suppliers.
Ultimately, the CFO's involvement is more than significant throughout the whole process of selling a company, starting with a focus on the numbers and details of the deal, and ending with the design of the future business model, once the integration of all parties has been achieved.
