Deal Stars: Don’t Try to Merge Without These Key People

Many people will contribute to the successful completion of an M&A transaction. But a few are particularly critical — from executives with long-term strategic vision to managers who mind the nuts and bolts.

You’ll want to make sure that these key people in your organization are adequately prepared for the sometimes long and challenging M&A process and that they have the necessary professional qualities needed to overcome inevitable roadblocks. If one of these players isn’t up to the task, he or she could slow progress, or even kill the transaction.

Cast of characters

Playing lead roles in most deals are the:

• Owners or CEOs – Even if owners or chief executives allow professional advisors to represent them during much of the M&A process, they have the final say in whether the company is bought or sold and need to sign off on all major negotiation points.
• CFOs – Financial executives are responsible for running the numbers and ensuring that a proposed deal — including negotiated terms — will achieve their companies’ financial objectives.
• Logistics heads – These individuals are tasked with making post-merger integration speedy, low-cost and as non-disruptive to company operations as possible.

Now let’s take a closer look at each of these positions.

CEO: Framing the big picture

A buying company’s chief executive begins the process by laying out a rationale for an acquisition. This rationale is particularly important if the company is public and its shareholders need to be convinced. The CEO should clearly articulate why the deal makes sense and be able to list the expected financial and strategic advantages to its key shareholders and board members. Note that CEOs shouldn’t get bogged down in details. They should set short- and long-term goals and task employees with accomplishing them.

Selling owners have a slightly different role. They must make the decision to sell their business — in many cases, a company they founded. This requires a certain amount of emotional strength and flexibility. Once that decision is made, the owner wants to ensure that the business receives a fair deal price and, possibly, that he or she agrees with the buyer’s plans for the business. Quick decision-making and responsiveness by selling owners usually is necessary if a deal is to cross the finish line in a timely manner.

CFO: Reconciling the numbers

Financial executives are the linchpin of an M&A deal. Buy-side CFOs must accurately assess the financial condition of any potential acquisition, and then recommend it (or not) to the company’s CEO and board members. The position demands a good understanding of current market conditions — including the availability of deal financing — to be able to craft an offer the seller will accept.

Sell-side CFOs need a verifiable sense of their company’s value and must be ready to push back if they believe a buyer is trying to lowball them. Like buy-side CFOs, a seller’s financial executives should have their fingers on the pulse of the current market and know whether tight credit is hampering deals.

Logistics leaders: Making the deal happen

Whether a company charges its COO or a dedicated M&A coordinator with the job, logistics people are responsible for turning an abstract idea into reality. Most organizations will use several individuals to accomplish the many tasks involved in a merger. An IT manager, for example, must reconcile different technology systems. Operations leaders must decide whether offices, production facilities and transportation services can be consolidated and workforces combined — and how to execute such plans.

Logistics officials need to work closely with their financial counterparts. If a buy-side COO determines that integration will be long and costly, the CFO should factor such costs into the company’s offer.

No “I” in team

Ideally, key people will complement and support one another. A CEO with big acquisition dreams needs to be brought back to earth if the CFO decides that the numbers don’t add up. A logistics head tied up in minutiae sometimes can use a CEO’s advice to focus on larger, strategic goals. The bottom line: For your deal to succeed, key people should play their assigned roles, but they also need to work well collectively.

© 2017