CFO’s Role Evolving With Corporate Transactions: Merger, Acquisition, Divestiture and Carve Out

Gust blog post by John Kinnaman, Managing Director, Accenture Strategy

Merger, acquisition and divestiture transaction volumes have been recovering strongly over the past 18-24 months. In fact, corporate transaction volume is projected to exceed last year by 25 percent, according to Thomson Reuters data 2003-12, Capital IQ 2013-15YTD. Many companies are therefore evaluating their portfolios to determine how they can use mergers, acquisitions, and divestitures as a strategic lever to grow the business.

Not surprisingly, CFOs play a key role in these portfolio evaluations, as well as in the shaping and execution of the eventual transactions. To realize the expected value of the transaction, successful CFOs must balance the need for speed with risk management… and the need to control transactions costs without cutting corners.

But many companies underestimate the complexity, duration and costs associated with a successful transaction. Some drivers of complexity include:

  • Transaction length and cost significantly influence attractiveness/success of the future state company in the market.
  • Temptation to only execute “must-do’s” and keep cost level low.
  • The buyer’s new management is not yet in charge to set priorities.
  • Level of organizational complexity (e.g. joint sales organizations, contracts, number of shared services in HR, Finance, etc.).
  • Number of FTEs and countries with local fiduciary requirements.
  • Complexity of existing technical landscape.
  • Number of new legal entities to be set-up; number of joint locations to be separated/ renewed.

In this active M&A market, CFOs have the opportunity to assume a critical role in the success of these deals by becoming a strategic growth advisor to the CEO. Finance leaders of the future demonstrate that they have a much bigger role to play in setting, evaluating and monitoring the growth and investment agendas.

In order to become true architects of value, CFOs must be both disciplined from a cost perspective, but be willing to take some risks in order to grow. They must partner with the CEO to determine how a corporate transaction will improve the business, and clearly understand that the most important – and often challenging – part of the M&A lifecycle is post transaction execution. Finally, it’s up to them to know the factors that drive successful transactions and technologies that can enable speed to value at a competitive cost.

Accenture has done extensive research on the topic of CFO performance, and it’s those CFOs who succeed in becoming architects of business value that are the ones that help their companies achieve high performance.

Join me at NetSuite’s webinar on 11/19 where we will discuss Accenture’s key findings from years of research on how CFOs can be architects of business value and key things to keep in mind when planning or evaluating a transaction.

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