Three ways a fractional CFO provides unbiased leadership

A fractional chief financial officer (CFO) brings an unbiased perspective, prioritising the best interests of the company, its shareholders, and long-term goals with no personal agenda, pre-existing loyalties, or external pressures. 

There are numerous ways a fractional CFO can make a positive impact on companies pursuing M&A, bringing an outside perspective that centres around three imperative areas for the buy-side.

Objective valuation and due diligence coaching

Accurately determining the value of the target company is crucial. An experienced CFO can objectively oversee comprehensive due diligence, direct the quality of earnings (QoE) work, and ensure all financial statements, tax liabilities, debts, and other liabilities are fully assessed and promulgated. Failure in this area can lead to overpaying for a company, or generate potential risks or financial missteps. The CFO’s neutrality helps to identify the true value of assets and liabilities needed for facilitating fair and effective negotiations with buyer, seller, and company leadership.

Fairly balancing stakeholder interests

M&A transactions typically have multiple stakeholders. The conflicting interests of board members, shareholders, employees, and sometimes external investors or regulators can create volatility that might impact the deal. A fractional CFO’s impartiality ensures that no one group’s interests dominate the process, advocating for a solution that aligns with the company’s strategic vision and creates long-term shareholder value. This is particularly important when faced with tough decisions, such as whether to divest certain business units or restructure operations post-merger.

Post-merger integration

Post-merger integration is the true test of a deal’s success. Biases and personal interests tied to one of the merging entities could hinder objective decision-making, leading to inefficiencies or missed opportunities for creating synergy. An experienced fractional CFO is pivotal in ensuring that financial processes, systems, reporting structures, and human capital are integrated seamlessly. 

This includes aligning budgets, financial planning, and resources, as well as monitoring the performance of the combined entity to ensure that the integration is carried out in a way that supports the long-term financial health of the company, and mitigates risks such as employee retention issues or loss of key customers. An impartial CFO also provides transparency in financial reporting, and helps stakeholders understand the financial status of the new organisation.

Jack McGovern is a SeatonHill Area Managing Partner with deep experience in private equity, health care services and technologies, FinTech, consulting, manufacturing and technology sectors. He has demonstrated expertise in high growth, crisis management, and increasing value for PE clients. With significant contributions to corporate boards, Jack is an outstanding leader with a proven track record of assembling, aligning, and motivating talent.