06 Sep

5 Things To Keep in Mind When Going In For a Merger

Things to keep in mind for M&A

Mergers and acquisitions are usually made to scale up operation, expand the business into new geographic markets, create new product lines, increase the firm’s capabilities, integrate the supply chain and increase financial muscle of a firm. During mergers and acquisitions, the most important person that can help a firm get into a successful merger is the Chief finance officer (CFO), the finance director or the chief finance controller of the firm. The following are some of the things that a CFO needs to look into when getting into a merger:

Get the facts right

As a CFO you need to understand what you are getting into. First of all you need to know what your firm or company is after. For instance are you after business contacts and better relationships, if yes, you will need to retain key members of your work force. Whoever if you are after economies of scale, you will have to cut costs by reducing the number of your workforce. You need to actually visualize the combined operation of the firms that are about merge before the deal is signed. Ensure that you do due diligence before the deal is signed.

Strategize

Being the firm’s financial director, all financial issues and concerns are your responsibilities. This therefore means that, it is your obligation to ensure that the financial deal that your firm is about to make should be financially correct and viable. You are therefore expected to give insights and findings about the prospective merger. You should also give your informed opinion about how beneficial the merger is to your firm. You need to convince the stakeholders and other partners and winning their support for the merger.

Make the business case

Normally, mergers and acquisitions are quite expensive. They are time consuming and have potential problems if they are done poorly. Being a CFO, you need to ensure that you understand why your firm is merging. You also need to know what you hope to achieve out of the merger.

Integrate

Merging two firms may help in reducing operational costs, increase profitability, bring in new and fresh talent and even increase sales. However, this can only be achieved if the CFO comes up with an integration plan and strategy. The CFO needs to come up with ways on how to implement the strategies and the people who will implement and see that the strategies succeed.     

Redesign

During mergers and acquisitions, it is evident that two teams must work together. Therefore, the CFO has the obligation of redesigning the compensation, incentive and salary programs of the new company. You need to come up with training programs that will help new employees acquire the required skills that will enable the firm attain its goals and objectives.

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