Across the globe, financial transactions have trended upward. In 2021, international merger and acquisition (M&A) activity increased significantly, eclipsing $5 trillion in deal volume for the first time in history, growing 64% over the previous year.
I’ve worked at startups, private equity firms and high-growth companies, handling acquisitions as both the acquirer and target. In virtually every scenario, each transaction had distinct requirements and needs based on unique factors associated with each deal. But underlying these differences were a few critical similarities with respect to acquired-side financials.
If being acquired is a goal for your company, consider the following key elements to establish the best possible financial operations in support of a potential transaction.
Hire the right people
Whatever acquisition route you seek, it’s important to consider the outcome of the transaction — all money is not created equal.
Like most aspects of building a company, success largely depends on the quality of the team. The financial operations of a business are no different. Defining clear roles for financial management and hiring experienced staff in this space often makes the difference between a 10x valuation and a 20x valuation when negotiating deal terms.
The level and title of the financial management role will naturally vary based on the stage and end goal of the business. Early-stage startups, for example, may not need a CFO. Instead, a strong COO and experienced controller tend to provide adequate structure and oversight in that first phase.
The decision to initially forego a CFO may also be a function of budget and/or company aspirations. For companies seeking to maintain a small team, say less than 250 people, a CFO may unintentionally create a top-heavy leadership culture, in addition to being an expensive hire. However, if a company is looking to scale and is thinking about its growth path, the CFO position is a critical role.
