David Roberson is president of RoseRyan, a finance and accounting advisory firm, and ZRG company. Views are the author's own.
As an executive at one of the thousands of companies to complete an M&A deal this year, I’ve come away with this affirmation: Every deal is different. No matter how many acquisitions you have participated in, you cannot predict everything that is about to happen. You can, however, lean on your past experience and the expertise of others to make the process as smooth as possible and keep unexpected issues at a minimum.
At RoseRyan, a 120-employee finance and accounting consulting firm acquired in April by ZRG Partners, a global talent advisory firm, the process began with this premise: How could we take our nearly 30-year-old company to the next level? We were experiencing explosive demand for our services, but we knew our current capabilities and infrastructure would not be able to keep up over time. ZRG provided us with a way to retain our core business and our employees while greatly expanding our resources and our opportunities as we become part of a larger, more global company.
Here are some steps that worked well for us and that can help CFOs who are about to embark on an M&A journey:
Cast a wide net
Due diligence is not just a best practice for when you are researching a company you are about to acquire or join. Once your company knows a strategic change is in its future, dig deep into the many options available. An exploration of who may be interested in your company and their ideas for its future will be telling not only of the possibilities but the true value of your company, whether your goals are possible, and to what extent.
What’s your primary reason for pursuing a deal at this time? Has the talent crunch become untenable for your growth plans? Are you aiming to preserve the company as much as possible? Is the founder looking to retire? Is the company at a standstill if nothing changes? Narrowing down this answer will help you during both the research and decision-making phases.
Be prepared — for anything
As a CFO, you know this comes with the territory, but accepting it can help keep the calm during a very busy time. Something always comes up—such as a last-minute request that could threaten the timeline or the entire transaction. Consider how many deals were likely put on hold earlier this year when the Russia-Ukraine sowed uncertainty (about 4,739 deals worth a total of $611.3 billion closed in Q1, a 20% decline compared to the previous quarter and lower than the feverish amount of M&A activity that had been predicted, according to Pitchbook).
This is where past experiences and best practices can help guide you, by anticipating questions that your acquirer may ask you, so that you can have comprehensive, satisfactory answers and solutions at the ready. Before the process begins, you could have another set of eyes take a close look at your financials, to help you anticipate any issues that may arise.
Think past the deal signing
Much of your focus will be on negotiating terms and securing funding, but you’ll also want to think about what happens once the ink dries. Keep in close contact with your acquirer, to start understanding how their processes and systems can meld with yours. In the near term, start to get your communications in order—from the press release you will coordinate with the acquiring company to your strategy for discussing this news and the timing with your
employees, client, and prospects.
In the days leading up to our transaction, for example, we put together emails, meeting talking points, FAQs, in addition to an explainer video for our employees. The video format gave RoseRyan founder Kathy Ryan and me a way to quickly explain the announcement to our distributed worth, while sharing our excitement and commitment to this new iteration of the business. We followed up with multiple meetings, some of which involved our entire company and leadership from ZRG while other meetings were intentionally smaller, designed for people who may be more comfortable asking questions in smaller group settings with Kathy or me.
So, I suggest considering how the news will land when all is said and done: Some employees will be surprised and may need to process what the change will mean for the business and their role in it. Think through the types of questions your employees are likely to ask. How you answer will set the tone for day 2—the day when you are all part of an entirely new entity.