How an Outsourced CFO Can Help with Due Diligence

A CFO is required to carry out a wide range of tasks, from corporate strategy and board engagement to obtaining financing.
PALO ALTO, Calif. - Sept. 21, 2020 - PRLog -- Acquiring another company to get access to new customers, products or technologies can be one of the most critical decisions a business owner can make. Fortunately, your CFO is in a unique position to contribute significantly to the merger and acquisition (M&A) transaction process and, eventually, influence the success of the deal.

A CFO is required to carry out a wide range of tasks, from corporate strategy and board engagement to obtaining financing and reporting to stakeholders. However, M&A work can be more complex today than ever before, so it's essential to have a specialized team member who can handle the due diligence required of these transactions.

Hiring a full-time, in-house CFO with experience in deal-making can be costly, in addition to being rarely needed for a regular company, since these skills are relevant only for a short amount of time.

Creating the Transaction Plan

Before an M&A deal can be finalized, the CFO must carry out extensive due diligence in order to solidify the rationale behind expected outcomes. They need to consider financial questions about pricing expectations, risk and value add. And since they should be able to communicate the overall vision for the deal to all stakeholders, one that aligns with your company's bottom line, the CFO will have to conduct research that's both qualitative and quantitative in nature at this early stage.

Maximizing Synergies

After due diligence has been completed, the outsourced CFO turns into chief negotiator, ensuring that your business achieves the best possible outcome.

Since both the buyer and seller want to maximize synergy to ensure they're getting the most a deal can financially offer, it's essential at this stage that both parties maintain open communication about acquisition conditions, growth potential and other financial targets that will make the merger or acquisition a success.

Integrating for Operational Efficiency

To successfully integrate two companies and their cultures, the CFO must have an informed perspective on the values, the transformation opportunities, synergies and the potential cultural pitfalls so they can be ready for anything.

Apart from this, once the deal is closed, the CFO also needs to come up with a way to monitor the progress of the acquisition. If a system developed during the planning phase doesn't deliver the expected results, the CFO must be able to figure out the problems and also be ready with other possible ideas and solutions. This is where choosing the right performance metrics early on comes into play — you can't reflect and pivot if you aren't able to measure what's wrong with the system.
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