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Scale Your Business Through Merger and Acquisition Strategies

How CFOs Can Enable Seamless M&A Activity

For companies with an appetite for growth, merger and acquisition strategies (M&A) can be very enticing. In fact, this tactic has seen a massive spike in recent years: global M&A market trends in 2021 broke all prior records by a significant margin, up an unprecedented 24% from 2020 with over 62,000 announced deals. This flurry of activity can be attributed to the untapped demand of years prior, as well as a need for digital, data-driven technologies. With business leaders hungry for growth, these trends are expected to continue into 2022 and beyond.

M&A Market Trends Are Primed for Growth

As the speed of business continues to accelerate even in turbulent times, businesses need to be able to react faster. According to a recent KPMG study, 87% of CEO respondents are seeking to improve their digital capabilities through merger and acquisition strategies within the next 3 years. Among them, 50% categorize their pursuit of M&A as a priority to improving their business velocity. Most intend to either acquire or approach a technology partner to adjust their mindset toward the cloud.

CFOs today are expected to provide strategic direction to key stakeholders. When seeking to scale, the Office of Finance should consider all options, including a merger or acquisition. If your company is considering an IPO, seeking to sell to a private buyer may be just as profitable.  Conversely, acquiring a business may fill any gaps your company is currently experiencing. Either way, M&A can be an effective means to scale your business.

When seeking to scale your business, the Office of Finance should consider all options, including merger and acquisition strategies.

Effective Merger and Acquisition Strategies Demand Crystal-Clear Visibility

As any CFO interested in acquisitions knows all too well, there is a substantial amount of due diligence required on the part of both the buyer and seller. In the best-case scenario, the selling company is able to provide audited financial statements for a high degree of confidence in their numbers. However, if the seller is a private company, they haven’t had to worry about the scrutiny of public markets. Savvy buyers won’t necessarily see this as a problem, but it does increase the need for information and clear documentation of financial records.

Compiling financial statements and other necessary documents for any M&A agreement is a significant process requiring substantial company resources. The lack of accurate documents or an unstandardized financial close process only complicates the process further. In some cases, inscrutable records could end up hurting a company’s valuation or even sink the entire deal. Manual, error-prone financial processes simply aren’t scalable with aggressive merger and acquisition strategies. Without a better method, CFOs could squander the abundant opportunities offered by current M&A market trends.

“If a buyer could only ask for one representation of a selling company in an acquisition agreement, it is likely the buyer would ask for a representation that the financial statements of the selling company be prepared in accordance with generally accepted accounting principles (GAAP), consistently applied, and that the selling company fairly present the results of operations, financial condition, and cash flows for the periods indicated.” – Forbes

Merger and acquisition strategies require visibility into all major finance processes in order to be effective.

Scale Your Business Through Automation

In order to provide the required visibility into their financials, companies can turn to automation software. Standardizing processes under a centralized platform allows for increased visibility while also streamlining for scalability. From checklists and task libraries to status updates, the right tool can be an all-in-one solution to manage month-end processes and allow for easy documentation to increase confidence in the numbers. When a potential buyer doesn’t have to ask clarifying questions or wait weeks for documents to be compiled, deals can happen faster and more frequently.

Workflow automation solutions allow the setup of a centralized workflow that is visible to all team members through preceding and succeeding tasks that display status, the owner of the task, and any due dates. These tasks are established by policies and procedures that are listed directly within each task. Everything within the tasks is date-, time-, and user-stamped and fully editable. This can help a selling company get away from problematic spreadsheets, which don’t offer the necessary transparency that is needed for most merger and acquisition strategies.

If you’re ready to scale your business, you can learn more by checking out our related eBook.

Scale Without Fail

Ensure the integrity of your financial close as you grow your business.

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Written by: Nathan Stabenfeldt