Valuation Expectations – Buyers vs. Sellers
We recently surveyed the Axial Investment Bank membership on the topic of exit preparation and will be sharing the results…
It’s no surprise that M&A transactions are one of the most intense periods a CFO experiences with his company. It’s essential CFOs from both acquiring and acquired companies communicate effectively, to ensure that deal synergies are captured. With global deal volume at an 8 year high, it begs the question: what happens to the selling company’s CFO once the deal whirlwind ends?
The short answer–they become part of the CFO surplus. Of course, the process is much more complex than just joining the ranks of the previous C-Suite elite, but it’s rare that the acquired company’s CFO will take over the coveted position after two companies merge.
Knowing when to move on
According to Korn Ferry International, about a third of acquired company CFOs end up at another company within 90 days of a closed deal. These moves are common, as the experience gained from a successful run as the central financial figure of an organization proves valuable to many companies looking to hire a new CFO.
But take note–these transitions do not happen overnight. It takes a forward-looking financial executive to both accept the reality of the situation and be open to a career pivot. And it doesn’t help that the search for a new position must begin as the transaction is occurring.
Retaining talent is a priority
For certain M&A transactions, it makes sense for the CFO to assume a different role at the resulting company. When he feels a strong loyalty to the company he helped build from the ground up, he might want to see the vision through and act in a more operational role during the integration. It is well-known that retaining the right talent is key to the success of M&A deals, and giving the acquired company’s CFO a new role is a way to keep those passionate about the business during restructuring.
Making the move to the board
For those looking for a more radical change, the successful sale of the business can be a CFO’s transition to the board side of a business. Whether it’s a spot on the board of a related company or completely new venture, this is an opportunity to be involved with a company’s mission on a more conceptual level.
For all members of the acquired company, a transaction is bittersweet. If executed properly, the company exits successfully, and the CFO leaves a hero. But in order to avoid joining the ranks of a deal boom-induced surplus, a CFO must simultaneously face the writing on the wall that it’s most likely time for a career change. While some articles have pointed to a concerning growth in the reserve of former CFOs, the skills acquired during such tenure are highly transferable both within companies and across industries, so it shouldn’t take long for this pool of talent to react to the M&A boom.
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