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M&A and the CFO

Successful integration requires a careful examination of people, systems and data – just the sort of insight FDs can bring to the table, reports Beth Ashmead Latham.

Mid-market firms looking for a business boost have found M&A to be an appealing solution. Take JD Sports’ acquisition of Go Outdoors for £112m in November 2016. A year on, Go Outdoors sales had risen 5.7% after an expansion of stores – and by February 2018 turnover was up from £213.8m to £232.5m.

For vendors, a merger offers access to better systems, support and cash flow; while for buyers, it can help them diversify and grow. But how can FDs and CFOs bring added value to the process?

According to Christopher Yates, group finance director from Gordon Dadds Group, early planning provides detailed knowledge of each aspect of the deal – and the chance to resolve potential problems before it’s too late.

While Gurinder Sunner, who leads the Midlands practice for investment company BGF, argues that vendors must be clear about whether they want a control investor, who helps dictate strategy and owns a majority, or a strategic partner, who has a stake but isn’t in charge. “It’s good to have a clear idea of how you want the relationship with that investor to work, and therefore pick the right investors to go and talk to,” he says.

This is an extract from the Business & Management Magazine, Issue 273, April 2019.

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