Post-Acquisition Playbook 3 of 3: How Financial Leaders Succeed After An Acquisition
How Financial Leaders Succeed After An Acquisition
by Brooke Evans, CEO
The ink has dried, the closing is done and the celebratory champagne sits on ice, waiting to be popped. No, scratch that – it’s waiting to be sabered. This road to closing the acquisition has been a long, arduous one and deserves a dramatic celebratory moment because you’ve finally reached the finish line, right?
Well, not quite.
Because while you and your team have earned this opportunity to finally exhale after many months, the best financial leaders we’ve worked with know that this moment is just that – a moment of respite.
These M&A veterans know that their team is already fatigued from getting the deal across the finish line. But more importantly, they know that an even bigger tidal wave of complex work is about to fill their plates during the next phase: the post-acquisition phase.
From opening balance sheets, to working capital true ups, new bank reporting, financial integration, and everything in between, the most successful financial leaders know to expect one thing: It will get worse before it gets better.
Admittedly, I remember how rudely awakened I was by my own naiveté the first time I did a deal. The excitement, relief and bliss that I felt at the closing table was quickly replaced by a sense that every day that followed was getting somehow harder. After many similar experiences, the common denominator became clear: The hardest phase of an acquisition is roughly 45-90 days after the closing.
A Financial Leader’s Life After Acquisition: 5 Winning Plays
But even clearer than that? The winning plays we’ve consistently seen our clients make while serving as an extension of their M&A teams.
1. They Start With The End In Mind.
The best financial leaders we’ve worked with anticipate and plan for the post-acquisition phase long before it actually arrives. While this might sound like an impossible feat, especially considering the pressure they’re under trying to get the deal closed, these executives are masters at deploying resources effectively so they can stay in their strategic lane.
Armed with a thoughtful post-acquisition plan, they bring clarity, stability, and success to their organizations and their teams.
2. They Hyper-Focus On Their Team.
We’ve already mentioned that people are fatigued by the time post-acquisition work begins. But in addition to that, many people also experience the feeling of being destabilized because of the inherent uncertainty in their roles.
Great financial leaders realize that tired people + more work + an uncertain future is not a recipe for success. They recognize that while some employees may feel inclined to start dusting off their résumé, so they to take inspired action to support their people. These leaders hire supplemental support for their team, they clarify roles, and they paint a vision of the future, thereby creating an environment where people feel secure and focused.
3. They Maximize The Integration Budget.
Most M&A transactions carve out a specific pool of funds treated as add-backs to EBITDA designated for integration-related efforts. Savvy financial leaders are involved in negotiating these amounts upfront to ensure that ample funds are available to achieve their integration goals.
Moreover, these leaders often use these funds to hire consultants and outsourced professionals to either work directly on integration efforts or to backfill key internal team members who are deployed on integration work.
These leaders realize that hiring consultants aligns with the temporary nature of the integration budget – as opposed to full-time hires who become an incremental fixed cost once integration is complete.
4. They Are Strategic About Integration.
There are as many approaches to financial integration as there are letters in the alphabet. As they craft and implement the financial integration plan, smart financial leaders give strong consideration to culture, people, processes, technology, and stakeholder needs. They realize that financial integration is not a one-size-fits-all solution across the order-to-cash and financial reporting processes, and instead yield a better return on investment by aiming for best-of-breed outcomes.
5. They Are Vigilant About Cash Flow.
Acquisitions frequently come with new treasury requirements, debt facilities, and covenants. Proactive leaders get to work quickly to revise and enhance cash-flow forecasting since visibility into cash and covenant compliance is even more mission-critical.
Ultimately, the greater your bench strength, the greater your odds of success. At CFO Alliance, we serve as an extension of your executive team, supporting you through the M&A process, play-by-play, from initial planning to close and on to final integration. Contact us today to learn how.
In case you missed it, check out Pre-Acquisition Playbook 1 of 3: How Financial Leaders Succeed Before an Acquisition and Acquisition Playbook 2 of 3: How Financial Leaders Succeed During An Acquisition.