CFOs... if you might be acquired, here are 10 ways to prepare (having looked at several PE deals over the years):
1. Company Financials
Might seem obvious, but have a grasp on the financial picture as a whole. What makes up the P&L? What are the strong areas? Weak areas? Revenue, Gross Profit, EBITDA, and Cash should be figures you have "ready to go."
2. Projections
The investment bank will help you with this, but please make sure the projections are reasonable and defensible. Every pitch deck shows "up and to the right," so please make the assumptions thoughtful and clear.
3. Contracts & Obligations
All of this will end up in the data room and reviewed by buy-side counsel. Make sure you (and sell-side counsel) have reviewed everything and highlight anything that might have a negative impact on the transaction.
4. Compliance
Again, sell-side legal will help you here, but please ensure the company is in compliance with all relevant regulations and laws, such as securities laws, tax laws, and labor laws. A mess of compliance issues can be a quick deal killer.
5. Communication
You don't have to shout from the rooftops, as much of the transaction will be kept confidential, but you'll need to bring in relevant stakeholders along the way (investors, key employees, key suppliers, etc.).
6. Deal Negotiation
The investment bank will help create value here through multiple solicitations and also advise on structure (they're deal experts, after all), but please make sure you understand the implications of the deal. What we agree on in diligence appears on the balance sheet and in legal documents post-closing (debt/equity structures, preferred equity, etc.).
7. Financing Options
Similar to no. 6 above, you want to help ensure that favorable and reasonable market terms have been obtained in the financing process. Again, the investment bank will help you here, but please make sure you understand the new balance sheet and credit agreement.
8. Due Diligence Management
It will feel like you have 2 jobs for a while, managing your day-to-day as well as the multitude of diligence requests that come through from the buyer. Do your best to keep up, as the ongoing financial performance is paramount to the success of the deal.
9. Department Coordination
Bring in key leaders and employees as needed to help answer operational diligence questions and keep them apprised of the transaction.
10. Integration Prep
This can wait towards the end of diligence, but the time will come when integration is discussed in the "100 day plan." Keep this in mind as you go, as there will be cultural and process changes once the deal closes.
How I Can Help Further
If and when the time is right, I offer refreshingly straightforward Financial Modeling Courses for FP&A and Private Equity Professionals. Check them out if you're interested (if not, that's cool too 👍).