When it comes to selling a business, the CFO’s opinion is crucial. A CFO is usually the one who knows the most about the company’s financial history and overall economics. The majority of CFOs have a solid monthly reporting procedure in place and understand how to interact effectively with lenders and auditors. However, shifting from routine reporting and compliance to the frenzy of an M&A transaction may be disorienting, and an unprepared CFO may find themselves overwhelmed by M&A requests and decision-support stacked onto their day-to-day tasks. By being prepared and organized, a CFO can get ahead of the job while also creating value to an M&A in process.

In terms of preparation, consider the monthly reporting packages in addition to the high-level financials. Collaborate with your senior staff to monitor and save data on a few important performance metrics each month. Keep track of sales funnel snapshots and have someone calculate conversion rates. Maintain records of extraordinary expenses, one-time costs which are long-term investments, as well as supporting documentation. Track variations from budgets and keep track of what went well and what didn’t. Consider your forecast and create a link between the previous twelve months’ performance and the upcoming twelve months. Anything that appears to be dangerous should be flagged and discussed with the responsible businessperson.

Getting organized entails assembling a data room. Bring together all of your monthly results in one place using Excel spreadsheets. Add up all of your adjustments and add backs. Gather the fundamental due diligence documentation that your investment banker and ultimate buyer will require, like company contracts, personnel details, IT summary, and tax filings. Collaborate effectively with your due diligence partners.

While each M&A process has structure and timetables, there are always unexpected issues that arise. Unexpected diligence demands, financial performance that doesn’t match the budget, and vendor cost changes, just to name a few. A good CFO is a member of the team that decides how to respond to these situations. Their knowledge of the organization’s core economics, consumer trends and statistics provides financial clarity to business questions.

Alvarez & Diaz-Silveira LLP is a corporate law firm in Miami, focusing on international and domestic M&A, finance, real estate and corporate immigration. For more information, visit us online or call (305) 740-1940.